Vacant Office Space

The owners of vacant office spaces lose 6 million Euros per month

Over 595,000 sq m are available in 388 office buildings, according to a market analysis based on data from the ESOP offer portfolio, probably the most extensive portfolio of class A, B, and C office buildings, managed by a real estate broker in Bucharest. Considering the average rent of 10 Eu / sqm, we can estimate that approximately 6 million Euros are lost per month in the office market.

“If in the period before the crisis started in autumn 2008, the rental terms varied between 2-5 months, depending on the total available areas and the required level of rent, at the moment the average rental terms are between 8-10 months, reaching in the case of specific properties at 14-16 months. Many landlords are still running after the illusory profit generated by a higher level of rent, realizing quite a bit the inevitable loss that each month of vacancy represents “, considers Mirela Raicu, Partner at the real estate consulting company ESOP Consulting.

For example, an office space that you want to rent for 12 Euro/sqm, for 2 years, after a non-lease period of 6-8 months, reaches a real rent of 9 Eu / sqm. This is because each month of non-rent reduces the rent level by 0.3-0.4 Eu / sqm.

If we also consider the uncertainty of obtaining the desired rent level, we notice that the loss can be even higher.

The market analysis conducted by ESOP at the end of the second quarter of 2011 shows a decrease in the vacancy rate of class A office buildings and an increase in the supply of office space available in buildings requiring less than 11 euro/sqm.

On the segment of office spaces below 11 Eu / sqm, although the stock registered an increase in the second quarter, we notice that the total level is lower than on the segment of spaces of 11-15 Eu / sqm, natural aspect in the conditions in which over 58% of the requests coming from the average companies that rent these types of buildings, have budgets under 11 euro/sqm.

“We have talked to many landlords over the past six months and offered them audit services for non-leased office space to determine what the real market value is and what needs to be done to speed up the rental process. As a result of the steps taken by ESOP and other real estate companies, we noticed that some of the buildings that in the 1st quarter of 2011 were promoted with budgets between 12-15 Euro/sqm, migrated to the category below 11 / euro sqm, sign that some landlords are beginning to realize that the primary loss during the crisis we are going through is the vacancy rate and less than 2-3 euros more for rent per square meter “, says Mirela Raicu from ESOP, the company specialized in office space rentals.