The massive delays in the issuance of permits for new real estate projects in Bucharest will put upward pressure on office rents, according to a report by Griffes
While office deliveries will hit 110,000 sqm across the city this year, for next year the projects expected for completion will have a total surface that will be 85% less compared to 2023.
“By 2025 and 2026, the capital city will witness the delivery of less than 70,000 sqm. 2022 has already sensed increases over 5% in rents, but 2023 will probably bring more than 7%. Indexation and surging construction and energy costs will pump up headline rents in Bucharest prime district above €24 per sqm, never seen from 2008 levels,” according to the report.
Across Romania, the office leasing activity might also be hit by lower demand from IT companies. In 2021, IT made 35% of the total office new leases, while in 2022 it already dropped to 27%, reaching 49,500 sqm.
“A number of factors are driving this, starting with the still reasonably high productivity in work from home, massive layoffs announced already in January 2023 by big tech companies, and extensive efforts to reduce costs - all these are steering a reduction of the office footprint,” adds the report.
However, more office demand might come from the revival of outsourcing activities and the efforts of more companies to gather people back in the office at least three days per week. Nonetheless, some companies might cut their leased space due to rent indexation and increases in operational costs.
