51,000 square-meter of office space were leased in first six months in Bucharest, down 35-40% from year-ago period, according to the Jones Lang LaSalle report. Moreover, the outlook remains negative for the remainder of the year: office rental market set to shrink 50-60% YoY.
In first six months of the year, less than 51,000 square meter of office spaced were leased, of which 27,000 in first quarter and 24,000 sqm in second, which translates into a 35-40% decline from a year earlier.
“The demand for office spaces will remain dominated by multinational companies that move their Bucharest headquarters to Class A buildings, even though the financial crisis has severely damaged their expansion policy”, said Jones Lang LaSalle.
In Bucharest, the construction completions in the first half totaled 200,000 sqm, of which 140,000 sqm in second quarter only. Therefore, the amount of available office space reached 1.35 million sqm in first half, 44% of which being represented by Class A offices.
“We estimate that around 60,000 sqm of office space is currently under construction and will be delivered in the second half, which would lift the annual office space stock available to 270.000 sqm, same as a year earlier”, said JLL.
As for rents, the maximum level dropped from 24 euros/sqm/month to 22 euros/sqm/month in Q2. The average vacancy rate increased to 10.8%, to 5% for A class building and 15% for B-class respectively.
If for the end of this year, Jones Lang LaSalle expects 270,000 sqm to be delivered, for next year, predictions stop at 180,000 sqm of office spaces.
“We think the office rental market may improve in 2010, once the economic recovery sets in, but the average leased surface will be lower, and the available sublease space will go further down. The vacancy rate will increase in the remainder of the year, but will decrease i
