The availability rate for high-quality office space will fall to about 5-7% this year from a level of 7-10% last year, a study by real estate company DTZ Echinox shows.
In 2000 the availability rate for office space reached 20%. Subsequently it began to shrink gradually amid foreign investment in Romania.
“The office segment has been quite dynamic, with the volume of rental deals reaching 120,000 square metres last year. For the current year we are expecting deals on this segment to be higher by about 10%,” said Tim Wilkinson, DTZ Echinox manager.
Compared with last year, the amount of new space that will come onto the market this year will double to around 130,000 square metres.
Most office space that will be supplied in 2005 has already been rented, which, say DTZ Echinox, is a reflection of the relatively limited supply of high-quality office space.
“The market is going through a crisis when it comes to office space with more than 1,000 square metres on a single floor, with companies looking for that sort space focusing on projects that are under development,” the study says.
Rent for office space ranges between 16 and 20 euros per square metre in the northern area of Bucharest and 11 and 15 euros per square metre for the centre of the city. “In the medium term rents will stay at a relatively constant level, but in the longer term we will witness a slump due to delivery of projects currently under development,” the company explained.
Speculative development does not account for a large proportion in total delivered space at the moment, however their number will go up in the coming period thanks to better financing methods. Another expected short-term tendency is the higher number of large projects to be delivered to the market.
“While so far most projects have been financed with money from Austrian, Israeli, French and Greek investors, Romanian capital will now start to play a bigger role in total investments in office projects,” the study says.
Yields on investment in office space were around 11-12% last year, but DTZ Echinox representatives are now expecting lower annual yields, as the Romanian market is growing more mature. Four years ago, annual yields on real estate investments were in the region of 13%, one of the highest levels in the region.
The total volume of class A and class B office space is set to reach 570,000 square metres in 2005, more than double the value seen in 2001.
For industrial space, on the other hand, the demand is for between 2,000 and 5,000 square metres, below the average for Central and Eastern Europe. alexandru.cerchez@zf.ro