Under inflationary pressure, the office market has stagnated
In 2022, the office market went through a period of stagnation. Demand values remained at the same level as in 2021, while deliveries of new space halved.
Bucharest, January 25th 2023 - In 2022, the office market went through a period of stagnation. Demand values remained at the same level as in 2021, while deliveries of new space halved compared to 2021.
Total demand for office space in Bucharest stagnated compared to the previous year, reaching 286,100 m², a level comparable to 2021. At the same time, net demand increased only slightly, by 3%, to 140,500 m².
In the last quarter of 2022, total demand for office space amounted to almost 85,000 m² in Q4 2022, similar to Q4 2021. Net demand amounted to 34,800 m², also very close to Q4 2021.
Just over 25% of the total demand for office space in Bucharest in 2022 came from the IT sector, followed by the professional services sector (12%) and the financial-banking sector (almost 9%).
In 2022, office buildings totalling a leasable area of 124,500 m² were delivered in Bucharest, representing only half of the previous year's deliveries (245,800 m²).
Only one office building, Equilibrium 2, with a leasable area of about 19,500 m², was delivered in Q4.
“Occupiers face an increasingly need to transform as well as a difficult balance of cost pressures.
Workplace diversity, ESG Targets/ green footprint and the need for higher quality space will support rise in office space refurbishments, a trend that is enhanced by both supply constraints on new development and dwindling demand for older space. This will result in a slowdown in expansionary demand, heightened sublease activity and a focus on renewals.
At the same time, refurbished office space will be required if the market is to meet demand for Net Zero Carbon buildings”, declared Madalina Iconaru, Consultant Office Agency at JLL Romania.
Deliveries of office buildings will remain low in 2023, at around 104,000 m². The most important projects expected are phase 2 of One Cotroceni Park (34,500 m²), phase 2 of U-Center (33,200 m²) and building A1 of the @Expo complex.
As expected, the vacancy rate started to decline in the last quarter of 2022, from 13% in Q3 to 12.54%. Most likely, the vacancy rate will continue to decline slightly throughout 2023.
Rents were maintained in Q4 at the same level as in the previous quarter, with prime rent (for the best spaces) remaining at €19 per m² per month. Further rent increases are possible in the first part of 2023, on the back of inflation indexation.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 102,000 as of September 30, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.