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Romania Bucharest office market remains fluid and flexible

Office & mixed-use development
Two distinct trends have emerged in 2023: securing entry into prime new locations and optimising the portfolio through best value negotiations, all driven by a market with limited deliveries. After the first three months of this year, the office sector in Bucharest shows a positive fluctuation in terms of total leasing activity, being 71 pct higher than the same period last year.

Against the backdrop of a fluctuating economy and the continuing uncertain state of building permits in Bucharest, companies continue to rely on a cautious strategy to ensure that in the next real estate cycle they will benefit from the best terms and conditions negotiated for office space. Two thirds of the transactions concluded in the first part of 2024 are renegotiations/renewals, a trend that started in 2022 and is still taking effect.

A compelling example of this is the renegotiation transaction of more than 29,000 sqm carried out by Genpact in Hermes Business Center under the advice of CBRE, which holds at the end of this first quarter a market share of 34 pct in Bucharest and 29 pct in Romania being the leader in the office sector. This transaction is the largest in the last 10 years in Bucharest, alone accounting for almost a quarter of all rental transactions in Romania in the first quarter. A total of 97,400 sqm were transacted in Bucharest during this period, with take-up transactions (rental transactions including new demand and relocation) totalling just over 33,000 sqm, similar to the area transacted in Q1 2023.

Large companies are still consistently pursuing their long-term real estate strategy with the ubiquitous flexible working component. Technology and services continue to be the dominant components of office demand, despite the propensity of these sectors to work from home, accounting for over 66 pct of total leased space in Q1 in Bucharest.

At the same time a multitude of small and medium sized companies are using smart office positioning to differentiate themselves in the labour market, attract talent and create a pleasant and healthy working environment for employees. The dynamics of the office market is particularly supported by this type of companies: 32 transactions out of 56 in the first quarter in Bucharest are for modern office space up to 1,000 sqm, and 25 of these are relocation or new demand rental transactions.

We're in a time of opportunity for companies that choose to work with professionals who can make them stand out. There is momentum across all types of premises, across all types of tenants. If we look at the top 5 rental transactions of Q1, we see both records of the last few years and spaces of just over 4,000 sqm.
Alina Calciu, head of A&T Services Office Occupiers at CBRE Romania

Three trends coagulated after Q1 2024:

A healthy vacancy rate

Companies' focus on making workspace more efficient in the context of hybrid working has increased the vacancy rate from 9 pct to 13 pct. But this has opened a new category of space: fully furnished offices, ready for immediate plug & play take-up. These are suitable for a medium-sized tenant (1,000-1,500 sqm) looking for a quick, hassle-free, and budget-friendly solution. This is a dynamic area for transactions in the coming period.

Planning ahead

The lack of new supply has led larger contracts (>10,000 sqm) to plan for the next rental cycle. This creates opportunities for future developments ranging from individual offices to business or mixed-use campuses.

Flexibility is key

Hybrid working is still evolving, so all companies are looking to secure a flexible future. All our discussions go beyond leased space and outline alternatives in the same building or in close proximity. We map out options for additional space, additional meeting rooms, conference centres, coworking facilities, amenities.

The market for modern office space is one dominated at the moment by a lack of new supply, a reality that is contributing to some extent to pressure on rents. However, this pressure is compounded by other components such as the cost of development, dictated by high interest rates and inflation in recent years, reflected in high indexation rates. For the few brave developers starting projects in this period, the construction cost structure will certainly indicate higher rents for new, sustainable, and modern projects delivered in the coming years.
Daniela Gavril, head of Research at CBRE Romania

The lack of deliveries has also generated an anticipated but now emerging direction, spurred on by the growing conversation around ESG criteria: investing in buildings delivered long ago to create new, sustainable space to current standards, often revitalising a property in a good location but in a sub-market condition.

Examples of this are the investments made by developers such as Hagag Development in the Downtown area by renovating and repositioning various properties, or One United Properties with One North Gate being converted into a residential building. We also have this small wave of universities in Bucharest and Cluj buying up office buildings to expand their university campuses, or buildings in protected areas that they want to convert into hotel functions, such as Mondrian Hotels at One United.

However, there is also a cost associated with these renovations that can be high or poorly estimated, so it is wise and recommended for all sellers to have a technical due diligence carried out by professionals for the buildings they wish to sell, to eliminate protracted discussions on subsequent Capex investments.

Latest news

Events

Poland The sector keeps moving!

schedule 23 May 2024
Opr./edited by ANZ

Tomorrow, as every year, we will meet at the golf course in Rajszew and at the Warszawianka courts to build relationships, have fun and, at the same time, take care of the condition of... the industry. All this in the spirit of healthy sporting competition.

Material partner

Poland Excellent Fern at Off Piotrkowska

schedule 04 April 2024
Eurobuild CEE

Intensive commercialization of the multifunctional Fern building under construction at Off Piotrkowska Center has begun. A modern building, the construction of which will start at the turn of 2024/2025, offers 4,700 sqm of service space and 2,700 sqm of office space.

Office & mixed-use development

Czech Republic Hila takes off in Prague

schedule 23 May 2024
Opr./edited by JC

Passerinvest Group symbolically launched the construction of the multifunctional Hila building in Brumlovka, Prague 4. Upon its completion in 2027, the building will provide a combination of approximately 20,500 sqm of offices for rent, 71 rental flats and retail spaces of 2000 sqm.

Office & mixed-use development

Hungary Vitrum to be handed over in autumn 

schedule 23 May 2024
Opr./edited by ANZ

Liget Center Vitrum, part of Wing Liget Center multi-building project developed by Wing in the centre of Budapest, is structurally complete. The new boutique office be completed in the autumn.

Hotels

Hungary Skybar opens in Budapest

schedule 22 May 2024
Opr./edited by ANZ

Cloud IX, Budapest’s latest panoramic skybar, has been opened in the ibis & Tribe Budapest Stadium Hotel in the WING Liberty building. Opened last December in Budapest’s District IX, the hotel complex boasts a total of 332 rooms and a wide range of services.

Investment & finance

Poland Green financing for three CPIPG office assets

schedule 22 May 2024
Opr./edited by ANZ

CPI Property Group Poland has concluded a green refinancing transaction with Aareal Bank amounting to more than EUR 277 mln. The funds received will be used for the refinancing of three Warsaw office properties: Warsaw Financial Center, Equator IV and Eurocentrum.

Office & mixed-use development

Poland Mercer isn't moving out

schedule 22 May 2024
Opr./edited by JC

Global firm Mercer, part of the Marsh McLennan Group, has renegotiated its lease at the myhive Nimbus building and remains at 7,300 sqm.

Residential

Poland First residential units in Towarowa 22 project

schedule 22 May 2024
Opr./edited by ANZ

The residential part of the Towarowa 22 project in Warsaw is taking off. Archicom is starting to sell flats in the first building under the Archicom Collection brand, which will stand in the immediate vicinity of the planned park.

Residential

Romania Phase III of The Level Apartments takes off

schedule 22 May 2024
Opr./edited by ANZ

Romanian residential developer Redport Capital has announced the start of construction of Phase III of The Level Apartments. The project has received a building permit for 105 apartments to be developed with an investment of EUR 13 mln.

Warehouse & industrial

Poland CTP will build for dogs

schedule 22 May 2024
Opr./edited by JC

CTP has been appointed by dog food manufacturers PsiBufet and Butternut Box to build a specialist facility to produce fresh dog food for distribution across continental Europe. The new facility is being developed in a build-to-suit model at CTPark Zabrze.

Warehouse & industrial

Panattoni Park Kraków East IV is ready

schedule 22 May 2024
Opr./edited by ANZ

Panattoni has completed the construction of Panattoni Park Kraków East IV. The completion will be financed with a EUR 10.5 mln loan from Bank Gospodarstwa Krajowego. The facility has been fully leased by Omega Pilzno.

Office & mixed-use development

Poland Batory I is fully let

schedule 21 May 2024
Opr./edited by JC

ZST (Zintegrowane Systemy Techniczne) has increased the size of its head office in the Batory I office building. As a result of the expansion, the Warsaw office building owned and managed by Globalworth Poland is now fully leased. 

Office & mixed-use development

Poland Some Oxygen for IT company

schedule 21 May 2024
Opr./edited by JC

LSI Software, a provider of IT systems that enhance operations and business management, has become a new tenant of the Oxygen Park office complex in Warsaw.

Warehouse & industrial

Poland New park from Panattoni

schedule 20 May 2024
Opr./edited by JC

Panattoni is launching the construction of a new speculative centre in the Łódź region. The project is to have an eventual size of close to 30,000 sqm

Office & mixed-use development

Poland Baskerville gets independent

schedule 20 May 2024
Opr./edited by JC

Baskervill, an international architectural, engineering, and design firm, opened up its office in Gdańsk. A 200-sqm space is located in Officyna building.

Office & mixed-use development

Poland House of Skills is staying at Bolero

schedule 20 May 2024
Opr./edited by JC

Consulting and Training Consortium, owner of House of Skills and e-learning.pl brands, has extended its lease at Bolero Office Point 1 in Warsaw. The new lease agreement provides the entire organization with 900 sqm of office space that has been signed through 2030.

Warehouse & industrial

Romania Cargus opens its new hub in Sibiu

schedule 17 May 2024
Opr./edited by ANZ

CTP expands its partnership with Cargus, a courier company in Romania, with the inauguration of a new location in Sibiu.

Office & mixed-use development

Poland UBC II will be modern again

schedule 17 May 2024
Opr./edited by ANZ

Atenor, the Belgian developer responsible for the Lakeside development in Warsaw's Mokotów district, intends to renovate the neighbouring UBC II building. The project received planning permission in March this year.

Office & mixed-use development

Poland Axi Immo stays in the tower

schedule 16 May 2024
Opr./edited by ANZ

Axi Immo has decided to extend its existing lease and add new space for its growing business lines in Warsaw's Spektrum Tower office building.

Warehouse & industrial

Romania VGP Park Bucharest North will grow

schedule 16 May 2024
Opr./edited by ANZ

VGP, a European provider of logistics spaces and semi-industrial real estate, has initiated the construction of the third building in VGP Park Bucharest North (A3). Building A covers an area of almost 26,000 sqm and has already two tenants, who have signed lease contracts for a total of more than 8,000 sqm.

Latest in Office & mixed-use development

schedule 23 May 2024

Hila takes off in Prague

Passerinvest Group symbolically launched the construction of the multifunctional Hila building in Brumlovka, Prague 4. Upon its completion in 2027, the building will provide a combination of approximately 20,500 sqm of offices for rent, 71 rental flats and retail spaces of 2000 sqm.

schedule 23 May 2024

Vitrum to be handed over in autumn 

Liget Center Vitrum, part of Wing Liget Center multi-building project developed by Wing in the centre of Budapest, is structurally complete. The new boutique office be completed in the autumn.

schedule 22 May 2024

Mercer isn't moving out

Global firm Mercer, part of the Marsh McLennan Group, has renegotiated its lease at the myhive Nimbus building and remains at 7,300 sqm.

schedule 21 May 2024

Batory I is fully let

ZST (Zintegrowane Systemy Techniczne) has increased the size of its head office in the Batory I office building. As a result of the expansion, the Warsaw office building owned and managed by Globalworth Poland is now fully leased. 

schedule 21 May 2024

Some Oxygen for IT company

LSI Software, a provider of IT systems that enhance operations and business management, has become a new tenant of the Oxygen Park office complex in Warsaw.

schedule 20 May 2024

Baskerville gets independent

Baskervill, an international architectural, engineering, and design firm, opened up its office in Gdańsk. A 200-sqm space is located in Officyna building.

schedule 20 May 2024

House of Skills is staying at Bolero

Consulting and Training Consortium, owner of House of Skills and e-learning.pl brands, has extended its lease at Bolero Office Point 1 in Warsaw. The new lease agreement provides the entire organization with 900 sqm of office space that has been signed through 2030.

schedule 17 May 2024

UBC II will be modern again

Atenor, the Belgian developer responsible for the Lakeside development in Warsaw's Mokotów district, intends to renovate the neighbouring UBC II building. The project received planning permission in March this year.

schedule 16 May 2024

Axi Immo stays in the tower

Axi Immo has decided to extend its existing lease and add new space for its growing business lines in Warsaw's Spektrum Tower office building.

schedule 14 May 2024

Engineers will move into Brain Park

Volvo Tech Hub will occupy 10,000 sqm of space in the Brain Park C building owned by Echo Investment. The new part of Volvo Car Poland will move into the Kraków office building in stages, starting in September 2024. 

schedule 13 May 2024

Office House won't get any higher

The Office House building in the Towarowa 22 project has reached its target height of nine floors. Installation of energy-efficient glass has begun on the façade.

schedule 10 May 2024

Eurocash stays at Diuna for longer

Eurocash Group is staying at the Warsaw office complex, part of the portfolio of Pine Bridge Benson Elliot and Syrena Real Estate, for the next few years. Eurocash has signed a lease for four floors in Building A at Diuna, totalling nearly 4,600 sqm.

schedule 09 May 2024

Saint-Gobain has views

Saint-Gobain Group has signed a 10-year lease for office space at Varso Tower. The company will occupy nearly 1,400 sqm on the 28th floor of the building.

schedule 08 May 2024

Spyrosoft stays in the Nowy Targ office building

The technology company Spyrosoft has extended its lease in the Nowy Targ office building in Wrocław. Employees have at their disposal roughly 2,800 sqm of office space.

schedule 08 May 2024

Nuclear tenant in Equator

Bechtel has chosen Equator IV in Warsaw, an office building in CPI Property Group’s portfolio, to be the location of the head office of its Polish branch. The American company is to build the first nuclear power plant in Poland in Choczewo, Pomerania.

schedule 23 April 2024

More retail at offices

Already 64 pct of Warsaw’s office buildings offer at least one retail or service unit, reveals Retail @ Office, the latest report from Cushman & Wakefield. With new retail supply remaining low across the capital, retailers and service providers are increasingly looking for alternative locations.

schedule 22 April 2024

Welcome to The Shire

The Shire - Beyond Coworking in the Warsaw Spire C building was opened according to schedule. 40 pct of the 1500 sqm of office space has been leased even before the launch.

schedule 22 April 2024

More companies choose Diuna

Two more companies have become tenants of Diuna, part of the Warsaw portfolio of Syrena Real Estate and PineBridge Benson Elliot. Intrum has leased nearly 370 sqm and Carrier Chłodnictwo took up about 500 sqm in the complex.

schedule 16 April 2024

The Bridge has gained its height

The structure of The Bridge skyscraper in Warsaw's Wola district has reached its final height, i.e. 174 m. The builders have just completed the last technical floor. Installation and finishing works inside the facility and the assembly of the facade are in progress.

schedule 08 April 2024

Bucharest office market remains fluid and flexible

Two distinct trends have emerged in 2023: securing entry into prime new locations and optimising the portfolio through best value negotiations, all driven by a market with limited deliveries. After the first three months of this year, the office sector in Bucharest shows a positive fluctuation in terms of total leasing activity, being 71 pct higher than the same period last year.

Edition 5 (288) May 2024

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