Companies rented 38,000 sqm office spaces in Bucharest in the Q1

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Office leasing activity in Bucharest nearly halved in the first quarter of the 2018, though, admittedly, 1Q17 was one of the strongest quarters we have seen this cycle. Still, 1Q18’s gross take-up in modern office spaces of over 68,000 sqm (-43% YoY) and net take-up of almost 38,000 sqm (-26% YoY) are a bit below the recent trend, reads a Colliers report. The real estate consultancy company says that the new take-up is mainly due to the energy/industrial and IT&C segments.

The softer activity numbers were achieved amid few big transactions, with deals smaller than 3,000 sqm generating the lion’s share of the market in 1Q18. The highlights in terms of office leasing deals were a confidential 11,500 sqm transaction in the Unirii and the 5,500 sqm UPC deal at The Bridge.

Leasing activity is mirroring the growing attention from developers towards central areas, Center West or Piata Presei/Expozitiei at the expense of the established northern part of Bucharest.

This time, the industrial and energy segment accounted for the biggest share of leasing activity, coming in at nearly 37% of total activity. The IT&C segment accounted for close to a quarter of total (23.6%), which is some ways below last year’s
exceptional result (44% of total leasing activity). No notable new entries were recorded in the first quarter.

In the first quarter, the new office leasing demand was temperated as against the maximum figures reported in the past, following a rate of unemployment at all-time lows and a growing interest for the regional office markets in Romania (…) The forecast is that the new demand is slowing down in the Bucharest modern office market by 10% in 2018, to 135,000 sqm. But, given the growing challenges, it is still considered as a fairly robust result after 2017’s excellent print,” said Silviu Pop, Head of Research în cadrul Colliers International Romania.

According to the Bucharest Office Market Q1 2018 report, Bucharest is set to receive around 185,000 sqm in new office spaces in 2018, with most during the second part of the year. Center-West is expected to remain the most active submarket, accounting
for 40% of this year’s pipeline, while the CBD is set to receive around a third of the total. Given the labour market issues for the construction segment as well as the expected slowdown in leasing activity, there are risks for some projects to be
delayed into 2018.

At the same time, the vacancy rate decreased towards 9% in 1Q18. Market conditions remain overall largely neutral, though skewed a bit towards a tenant market given ample developer plans for the subsequent years.

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