Business Forum • 17 September, 2024 at 10:48 AM
Contract renewals accounted for approximately 50% of office transactions in Bucharest during H1 2024, while the total demand fell to around 160,000 sqm, according to a Colliers report.
Overall, the professional and business services sector represents the largest number of office building clients, slightly ahead of the IT&C sector in terms of leasing activity.
In the past two years, renewals have accounted for a larger share of demand than usual, as many companies postponed decisions on their office lease contracts due to uncertainty surrounding hybrid work. In fact, the second largest lease contract in Bucharest's history was Genpact's renewal for 29,000 sqm in Bucharest-based Hermes Business Campus in early 2024.
“The lack of new deliveries in 2024 and 2025 could stabilize the market and even lead to further rent increases for Class A offices in prime locations, with Environmental, Social and Governance (ESG) playing a role in driving demand. It is also worth noting that Bucharest does not have an oversupply of office space per capita. Additionally, companies are making efforts to bring employees back to the office more frequently, which could signal an increase in demand over the medium term,” says Victor Coșconel, Head of Leasing | Office & Industrial Agencies at Colliers.
Going forward, Colliers' experts see increased demand for good quality Class A buildings, which is driving higher rent growth and occupancy rates compared to other properties. The low development pipeline for new office projects is also putting upward pressure on rents for offices in popular locations.