JLL: Under inflationary pressure, the office market in Bucharest has stagnated in 2022
In 2022, the office market went through a period of stagnation. Demand values remained at the same level as in 2021, while deliveries of new space halved compared to 2021. Total demand for office space in Bucharest stagnated compared to the previous year, reaching 286,100 sqm, a level comparable to 2021. At the same time, net demand increased only slightly, by 3 percent, to 140,500 sqm, according to JLL data.
In the last quarter of 2022, total demand for office space amounted to almost 85,000 sqm in Q4 2022, similar to Q4 2021. Net demand amounted to 34,800 sqm, also very close to Q4 2021.
Just over 25 percent of the total demand for office space in Bucharest in 2022 came from the IT sector, followed by the professional services sector (12 percent) and the financial-banking sector (almost 9 percent).
In 2022, office buildings totalling a leasable area of 124,500 sqm were delivered in Bucharest, representing only half of the previous year’s deliveries (245,800 sqm).
Only one office building, Equilibrium 2, with a leasable area of about 19,500 sqm, was delivered in Q4.
“Occupiers face an increasingly need to transform as well as a difficult balance of cost pressures. Workplace diversity, ESG Targets/ green footprint and the need for higher quality space will support rise in office space refurbishments, a trend that is enhanced by both supply constraints on new development and dwindling demand for older space. This will result in a slowdown in expansionary demand, heightened sublease activity and a focus on renewals. At the same time, refurbished office space will be required if the market is to meet demand for Net Zero Carbon buildings”, said Madalina Iconaru, Consultant Office Agency at JLL Romania.
Deliveries of office buildings will remain low in 2023, at around 104,000 sqm, according to JLL specialists. The most important projects expected are phase 2 of One Cotroceni Park (34,500 sqm), phase 2 of U-Center (33,200 sqm) and building A1 of the @Expo complex.