In 2016, the office rental market could grow by 20-25% compared to 2015
In 2016, there will be cascading relocations as a result of legislative changes and significant consolidations of some multinationals headquarters, which will lead to an increase in the office rental market by 20-25% compared to 2015, estimates Alexandru Petrescu, Managing Partner ESOP Consulting l CORFAC International.
The year 2016 could be the first year of a stage of giving up the poorer quality office spaces in Bucharest, in the next 3-4 years, there will be fewer and fewer company headquarters in communist block apartments or unsafe areas in terms of risk of earthquake or unprotected buildings in the event of a fire.
The large pre-lease contracts for ample office space, with areas of 10,000-40,000 sq m, concluded in 2015 or located in the pipeline will lead to the release of several class A and B + buildings in the central areas, for which demand is already emerging from customers in villas and residential apartments, determined by the new attitude of company administrators towards fire regulations and seismic risk.
“In 2016, several factors with a significant influence on the office market will come together simultaneously, there will be migration on all segments of the office market in Bucharest, amid increasing office supply: large tenants will consolidate their offices in the newest and better-positioned office buildings in the north-central and central-west areas, which will take the best in demand.
In their place, in the central buildings, but of smaller size and built in the last ten years, will be medium-sized companies, expanding or looking for a new image, which will rent office spaces of 500-2,000 sqm.
In parallel, there will be pressure on tenants in flats or villas, due to increased property taxes for these types of properties and the possibility of increasing rents accordingly as well as tightening seismic risk legislation and fire regulations. And for these companies, which have less than 50 employees, for the first time there will be several new choices of office spaces such as instant office offices, growing business hubs, and offices in small centers or medium, which will be released and which will have spaces with more affordable rents than in recent years “, says Alexandru Petrescu, Managing Partner | ESOP Consulting at CORFAC International.
Among the large transactions in 2015, through which the tenants freed up generous office space are:
Oracle 10,400 sqm – Sky Tower
Carrefour Romania 6300 sqm – Green Court Bucharest – Building B
Genpact- 22,000 sqm – Hermes Business Park
Oracle – 20,000 sqm – Oregon Park
Luxoft – 5500 sqm – Hermes Business Park
For 2016, at least three large pre-leases are announced: two large players in the banking field and one in the IT&C field want to consolidate their offices. They are looking for solutions for spaces of over 15,000 sq m.
What will happen to the offer of office space in the residential apartments located in the Unirii and Victoriei areas
“In the next 2-3 years, the offices arranged in the residential apartments in the Unirii and Victoriei areas will lose their attractiveness, and we estimate that they will return to the residential market, either for rent or for sale.
As for the villas, the unconsolidated and unrenovated ones are likely to be put up for sale, returning to the residential market. The only exceptions will be the historic villas, located in premium areas, well renovated, which ensure a distinctive image, which will keep their destination of offices because certain types of companies will want to continue to be based in an independent building due to the kind of activity carried out (for example law firms, business consulting, marketing and advertising, etc.)”, estimates Alexandru Petrescu, Managing Partner ESOP Consulting | CORFAC International.
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