Horațiu Papakonstantinou-Florescu, Chairman & CEO Romania, Hungary, Greece, Bulgaria, Serbia at Knight Frank, talked to Property Forum about the dominance of lease renewals, the anticipated 2026 delivery wave, and how Bucharest’s high yields and infrastructure projects continue to attract multinational tenants.
How did Knight Frank manage to secure major renewals like BCR and Deloitte in a year with a low delivery pipeline in Bucharest?
Renewals have been dominating leasing activity in recent years, particularly among large tenants. Several factors contribute to this trend: the limited availability of comparable large spaces in the existing stock, the high costs associated with relocation and fit-out works, and the higher rental levels of new developments entering the market. In this environment, we are definitely proactive in advising our clients, and we make sure to analyse for them all possible scenarios in the stay-versus-go process, so that they can take informed decisions. Specifically, for the aforementioned tenants, we have a longstanding collaboration with mutual trust and respect, and we continue to strive to be one step ahead in our services, also going forward, so we are proud to be office leasing leaders in Bucharest, yet again.
How are you helping financial clients adapt their office space requirements given the current economic climate?
The office costs for our financial clients have been directly impacted by the recent VAT increase, as they are unable to recover it. This means VAT represents a pure cost for them. As with all our clients, we provide in-depth financial analyses, market comparisons, and scenario planning. We work diligently to deliver the best results.
What advice are you giving landlords of older buildings to keep them competitive against ESG-compliant stock?
We advise landlords of older stock to invest strategically in their assets by implementing technical upgrades that directly impact tenants, improving the overall occupier experience while also reducing operational costs. At the same time, aesthetic upgrades remain essential and can significantly enhance the building’s appeal, helping it stay competitive in an increasingly ESG-driven market.
Which Bucharest submarkets do you expect to lead the office recovery in 2026?
I think the recovery of the office market will be signalled by an increase in pre-leases. For the first time in several years, we are expecting a meaningful wave of new deliveries in 2026 and 2027. I believe demand will be strongest in central locations, particularly with projects such as the second phase of Timpuri Noi Square and U-Center 3 coming to market.
How do Bucharest's current vacancy rate and rental costs impact its ability to compete for multinational tenants against Warsaw and Prague?
Bucharest remains competitive for multinational tenants due to relatively lower rental costs compared with Warsaw and Prague, while offering a very high quality of office spaces. Ensuring a strong pipeline of Class A offices will be key for the city to attract and retain international companies in the coming years. On top of that, ongoing and planned infrastructure works, like the metro expansion and the ring road, will make the city more accessible and attractive, helping it be the choice in the region.
As hybrid work becomes a structural norm, how is Knight Frank assisting companies in "right-sizing" their portfolios for 2026?
After several years of hybrid working, tenants now have a much clearer understanding of how they actually use their space, including peak and low periods of office attendance. We offer workplace services through our regional team. In addition, we believe that employees’ commuting time to and from the office, as well as the amenities available in the surrounding area, play a crucial role in how frequently they choose to be present in the office. For this reason, we offer commute analysis services, assessing employees’ travel times to different potential locations compared with the current one. Apart from that, we always advise our clients to look into the future. Flexibility has become essential, so we actively negotiate both expansion and contraction options to ensure the space can adapt to changing needs.
Yields in Bucharest remain higher than in other CEE capitals. What must happen in 2026 to convert this value gap into increased institutional investment?
Bucharest’s yields are indeed higher than in other CEE capitals, which makes it an attractive market for investors. At the same time, there is still a gap between sellers’ and investors’ expectations in terms of yields. The good news is that the city offers high-quality assets, often with very strong tenancy, and I expect this regional gap to narrow over time. This makes it a particularly good moment for institutional investors to take advantage of opportunities that combine higher yields with solid quality. While Bucharest is smaller than some other CEE capitals, it has significant potential and remains a very open and international market, even more so than many neighbouring countries. Increased stability and further country promotion will definitely help.
What is your demand outlook for office markets in the region this year in terms of core industries?
We expect IT&C and tech to continue leading office demand this year, as they represent the majority of occupiers and also the AI/Tech start-ups will probably want to scale. Most companies have now chosen their working model, and in most cases it’s hybrid, with a mandatory minimum number of days in the office each week. In the broader CEE region, it’s also important to attract new entrants and international companies, as they play a key role in driving demand and supporting the growth of our markets.
