The total leasing volume in Q1 2022 in Bucharest amounted to nearly 65,000 sqm, similar to the same period last year, but 10,000 sqm more than in Q1 2020, according to research data from Crosspoint Real Estate. However, tenant interest remains moderate compared to the years before the COVID-19 pandemic, when the lease volume exceeded 70,000 sqm in 2018 and 80,000 sqm in 2019.
“As we all expected, the office market will have a different course from now on, and the most important changes compared to the pre-pandemic period are hybrid work and the adaptation of multinational companies to this new reality by reducing the office spaces they’ve occupied before, together with a shortening of the lease terms, but also the fact that the variation between demand for office space and transactions has increased by 30 percent. As for the building owners, they will conclude their previously established plans, by focusing on their existing projects and ongoing developments,” says Simona Urse, Associate Director, Office Agency, Crosspoint Real Estate.
Starting this year, with the end of pandemic-related restrictions after a two-year-long period that was totally different from the pre-pandemic life, other trends are emerging on the office market:
– Large occupiers have returned to the office, most of them in a hybrid setup – 2-3 days at the office, 2-3 days of work from home – a setup that will most probably become permanent.
– Employees have re-evaluated their priorities, they don’t enjoy spending longer periods of time stuck in traffic, on their way to or from work.
– Especially since the beginning of the year, the rise in demand from potential tenants has subsequently led to an increased interest from potential buyers.
– A large part of the new demand comes from relocation plans, some as a result of the current geopolitical situation.
– Shortening of lease terms from 5 years, the standard before the pandemic, to 3 years.
– Human resources departments are researching for new ways to bring employees back to the office.
– Some companies are now willing to give up their currently occupied office space, even if it’s under a running lease contract, in order to find a more suitable space for their employees.
– Rent increases – impacted by inflation and adjusted based on the HICP (Harmonized Index of Consumer Prices) – most rents in existing contracts, including service charges, have or will increase by about 5 percent
– If until now net effective rents were diminished during the pandemic by various landlord incentives, now those rents have started to increase through the effect of contracts.
