Colliers report reveals slower trading activity in Bucharest office market, positive medium-term outlook
<p>Trading activity in the office market slowed in the third quarter of this year, mirroring trends from 2021-2022. Total demand for modern office space for rent in Bucharest dropped by 25% compared to the same period in 2023, to 236,000 square meters. New lease demand reached 82,000 square meters, reflecting an 11% decrease year-on-year, according to Colliers data.&nbsp;</p>

<p>However, the medium-term outlook remains positive as companies continue efforts to bring employees back to the office more frequently.&nbsp;</p>

<p>Colliers consultants also noted that certain areas of Bucharest show signs of transitioning to a more landlord-friendly market.</p>

<p>“We are still in a period where companies are adjusting to the post-COVID labor reality, but there appears to be growing momentum to encourage employees to return to the office. However, some firms continue to downsize their office space, even though the number of employees is similar to five years ago. In addition, companies remain cautious, given the economic uncertainties and the fact that a stable working model has not yet been established. However, compared to previous years, the role of offices seems to be becoming more important again,” said Victor Coșconel, Partner | Head of Leasing | Office, Industrial &amp; Logistics at Colliers.</p>

<p>The same report said 2024 will mark three consecutive quarters without any new modern office completions, the longest period without deliveries since 2005. The only project confirmed for delivery in the next two years is the 16,000-square-metre AFI Loft, expected to be completed later this year.</p>

<p>However, Colliers consultants anticipate a significant market rebalancing. While some areas of Bucharest show signs of transitioning to a more landlord-friendly market, the overall vacancy rate remains around 15% citywide.&nbsp;</p>

<p>Colliers consultants also noted that the market continues to be dominated by tenants occupying spaces between 1,000 and 2,000 sqm.&nbsp;</p>

<p>“Although there have been a few larger deals this year – including one of the most significant in the market’s history, the Genpact renegotiation at Hermes Business Campus – the average size of a recorded transaction is under 1,400 sqm, below the 10-year average of nearly 1,500 sqm per year,” reads the Colliers release.</p>

<p>Victor Coșconel commented: “There is clearly a slowdown in the IT&amp;C sector, which is the main reason the market is going through a weaker period. So far this year, IT&amp;C tenant transactions have totaled almost 70,000 sqm, making the quarterly average in 2024 nearly 24% lower than the quarterly average between 2015 and 2023. In contrast, non-IT&amp;C lettings have totaled 166,000 square meters, or an average of 55,000 square meters per quarter in 2024, which is 14% higher than the quarterly average for the 2015-2023 period.”</p>

<p>In the last two years, renewals have made up a larger-than-usual share of demand, following a trend also seen in other CEE countries like Poland. In Bucharest, renewals have accounted for up to 50% of signed lease transactions, as many companies have delayed decisions on office leases due to uncertainty around hybrid work. By comparison, the share of renewals averaged 28% per year in the pre-pandemic years, dropping to 19% in 2011 and 22% in 2019, Colliers said.</p>

<p><i>irina.marica@romania-insider.com</i></p>

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