C&W Echinox: New take-up record set on the Bucharest office market in 2023
Around 116,000 sqm of office spaces were leased in Bucharest in Q4 2023, thus bringing the total 2023 transactional volume to over 463,000 sqm, an all-time annual take-up record, according to data from the Cushman & Wakefield Echinox real estate consultancy company. The volume in question increased by 43 percent y-o-y, with a 19 percent growth also being recorded when compared with the previous benchmark of 390,000 sqm set in 2019.
The net take-up, excluding renegotiations and renewals of existing contracts, had a share of only 46 percent in the total leased volume in Q4 and 44 percent across 2023. As a result, companies leased new offices for at least 20,000 extra employees, primarily working in the IT&C, manufacturing, financial, retail and medical sectors.
The Cushman & Wakefield Echinox office agency was the market leader in Bucharest, closing transactions totaling 104,000 sqm in 2023, having a share of 25.5 percent in the volume brokered by real estate agents. Moreover, the office team oversaw leasing transactions of more than 250,000 sqm in the past 3 years in Bucharest.
Arghezi 4 (8,000 sqm GLA) was the only office project delivered in Bucharest in Q4, thus bringing the total 2023 new supply to 110,500 sqm, the lowest level since 2015.
The Bucharest office stock stands at around 3.4 million sqm, with the pipeline being very low, as only 2 projects are currently under construction (amounting to 42,500 sqm GLA), as a direct consequence of the ongoing urbanistic/ permitting issues.
Only one new building is due to be delivered in 2024, namely AFI Loft (15,000 sqm), the new supply for this year thus being at an all-time low.
The (contractual) vacancy rate of office spaces stands at 14.7 percent, down from 15.2 percent at the end of 2022. The vacancy rate should remain on this downward trend, especially when considering the uncertainties regarding the delivery of new projects, and mainly in buildings located in ultra-central and central locations.
Mădălina Cojocaru, Partner Office Agency Cushman & Wakefield Echinox: “While analyzing the office leasing market in the past 3 years, we noticed that more than 1 million sqm of such spaces were transacted in Bucharest, representing approximately 33 percent of the total stock. This volume was practically recorded in a period characterized by new market fundamentals, where companies configured their strategies concerning their office space needs. This led to a downsizing of occupied areas for some tenants, but also to keeping or even expanding the leased spaces in the case of most occupants. We have also seen that close attention is being paid to the overall quality of office spaces, making the buildings located centrally and ultra-centrally, with access to public transportation and those that meet the ESG standards, more attractive to tenants and having the highest asking rents on the market.”