Office rents in Bucharest rose by up to 15.8% in the 12 months to June 2023, with the highest prices recorded in the CBD area of the city, according to a report by Cushman & Wakefield Echinox.
Bucharest outpaced the average rent growth rate of 5.6% across Europe driven by inflation and construction costs. Only Dusseldorf and Rotterdam had bigger office rent gains of 26.8% and 22.4%, respectively.
Moreover, Bucharest experienced the highest rental spike when compared with the other capital cities across Central and Eastern Europe – Prague, Sofia, Budapest, Warsaw, Bratislava. In the region, Prague recorded an increase of 5.6%, Sofia 6.7%, Budapest and Warsaw 2%, and Bratislava 2.9% respectively. In Bucharest's CBD offices, monthly rents have reached €22.00 per sqm.
“The rising inflation, the increase of construction costs, as well as the uncertainties regarding the authorization and permitting of new projects in Bucharest, were the main drivers of this evolution in a market where the prime headline rents had previously remained constant in the range of €18.50 - 19.00/sqm/month between 2015 and 2022. The inflationary pressures will still be felt on the market, even if prices have started to stabilize this year. Given the sustained demand and the limited supply (especially from 2024 onwards), we can expect the upward rental trend to continue going forward,” said Mădălina Cojocaru, Partner Office Agency at Cushman & Wakefield Echinox.
There were four transactions of 10,000 sqm or more in Q2, with a series of blue - chip tenants firmly consolidating their presence in Romania. Moreover, 2023 marked a 16% increase in the average transaction size (1,500 sqm) compared with the 2021-2022 average.
In terms of new developments, Bucharest has an office construction pipeline for projects spanning 112,000 sqm, but another 300,000 sqm are in different planning stages due to the slow permitting process.
As of June 2023, Bucharest’s office stock totaled 3.38 million sqm, ahead of other capital cities in the region like Bratislava and Sofia.
