Existing office buildings will be increasingly sought after by companies due to a lacklustre development pipeline in Bucharest, which will continue to drive contract extension deals in Bucharest.
Contract extensions of companies in existing office buildings soared by 131% year-on-year by the end of 2023, according to data by Fortim Trusted Advisors.
On the other hand, the volume of take-up transactions, moving to new spaces was 206,434 sqm, down by 2% in 2023 compared to 2022. Together, new space rentals and renegotiations totaled 461,021 sqm.
“In terms of demand for office space, in the last five years, large companies have been looking first at office buildings under construction or in the process of delivery, in order to have the latest on the market in terms of technology, quality in construction and facilities. However, as deliveries of new spaces drop sharply, to 84%, competition for Premium tenants is reopened in the segment of second or third generation buildings. The condition is that they consider at least a refurbishment of common areas and digitalization of buildings,” says Costin Nistor, Managing Director of Fortim Trusted Advisors, an alliance member of BNP Paribas Real Estate.
Speaking about the market trends, Nistor suggested that landlords will have to look at all ways to retain their current tenants and improve their office occupancy rate, in order to be able to have as many strengths as possible in refinancing negotiations with banks.
“Considering the current interest rates, higher by at least four points compared to 3-5 years ago, we expect that some owners will have to look for new partners, sell part of their portfolios in order to secure bank guarantees or or look for other partial financing solutions,” concluded Nistor.
