Owners of old office buildings can be in trouble

"When you look at the office market from the outside, it looks a little bit boring. It looks like there is high vacancy rate already and it will be build a lot within the next two years. A lot of investors are beginning to worry. Obviously, in certain location, in certain quality, you still need to build, but there is a feel that there is too much being built," said Andreas Ridder of CBRE.
He explains that the new supply is not affected by the changes on the market, but it is affecting the older buildings where all the tenants move out to the newer building. "So what happen to the older buildings then," Andreas Ridder said it is the major problem. "Obviously we have seen rates falling, already over the last one or two years. Normally, when there is newer supply, prices fall. that is the danger that can further develop over the next two years, at least here. For example in Prague, there is a lot of office development as well, but cities like Budapest, there is hardly anything happening there. And Vienna - there is hardly anything happening there. And what is being built is pre let and occupied to very large degree. So there is no one direction to the entire CEE. A lot of differences. Moscow is the worst..." he explains.