Companies rent more property than available in 2015, says JLL

Last year companies leased 310,000 sqm of industrial property and 248,800 sqm of office space, according to JLL data. This was 60 percent above the stock made available during the year, which generated a high volume of pre-lease for spaces scheduled to be delivered in 2016.

In 2015 there were 160,000 sqm of logistics buildings given into use, 67.5 percent above the previous year, while for 2016 developers plan to finalize projects totaling 240,000 sqm, most of them built to suit, which is 40 percent above the level of last year.

Request for such spaces reached 310,000 sqm, which was comparable to the level of the previous year. New contracts and expansions totaled 265,000 sqm (up 27 percent).

With new demand for spaces on the rise, the vacancy rate dropped below 5 percent in Bucharest and 10 percent outside the capital city.

The industrial stock reached 2.1 million sqm at the end of 2015 (up 8 percent over 2014), with almost half (1 million sqm) in Bucharest. The stock is expected to reach 2.35 million at the end of this year if all deliveries are made.

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Rent prices were unchanged during the year, at 3.5 – 4 EUR per sqm per month.

JLL representatives estimate demand will stay constant over this year. In Bucharest the largest demand comes from logistics companies, while across the country companies in the automotive sector are more active.

On the office market 62,425 sqm were delivered, almost half of values registered in 2014. Developers plan to finish some 360,000 sqm this year, a record level for Bucharest, at the second highest value ever registered (in 2009 the peak was reached with 375,000 sqm given to use). Half of the forecasted space will be in the Floreasca-Barbu Vacarescu and Dimitrie Pompeiu areas.

Demand for office buildings totaled 248,800 sqm in 2015, 15.4 percent below the previous year. About 110,000 sqm represented expansions and new contracts, a 9.3 percent drop over 2014.

With a low delivery rate and a constant level of request, the vacancy rate dropped to 13.3 percent in 2015. In Bucharest this index varies greatly, according to area, with Dimitrie Pompeiu standing at 3.7 percent and Pipera Nord (Voluntari) at 33.7 percent. However, the median rate is within the range of the region, with Prague registering a vacancy rate of 14.5 percent and Budapest and Warsaw posting a 12 percent rate.

The office stock reached 2.3 million at the end of 2015, while 2016 will bring it to 2.65 million. Bucharest is rather behind other large cities in the region, with Warsaw having a 4.5 million sqm stock, while Pague and Budapest register around 3.3 million sqm in office spaces.

The median in rent stood at 18.5 EUR per sqm per month in prime buildings, among the lowest in the CEE region. Warsaw, the highest prices market in the region, posted prices at 23.5 EUR per sqm per month. Budapest stood at 21 EUR per sqm per month, while Pague registered 19.5 EUR per sqm per month.

JLL estimates that demand has a potential for increase in Bucharest especially, while companies looking for new spaces will be active in the same fields as before, such as IT, BPO/SSC and professional services.

The retail segment totals 2.8 million sqm, of which 1 million sqm are in Bucharest, the largest sub-market in Romania. The stock is expected to reach 3 million sqm if all deliveries go as planned. Cluj, Iasi, Constanta and Timisoara follow Bucharest in terms of stock.

Prime rent stood at 60-70 EUR per sqm per month in Bucharest.

JLL is a financial and professional services firm that specializes in commercial real estate services and investment management. It currently hires 58,000 people across 230 corporate offices worldwide, working with clients in more than 80 countries. With a portfolio of some 316 million sqm, JLL posted a total of USD 118 billion in investments in 2014.

Natalia Martian