Bucharest Office Market In 2014: South Is The New Trend

01.07.2014 By Cristi Moga

The three largest office projects to be delivered this year in Bucharest are built in the southern half of the city, which developers have shunned so far in favor of the central and northern areas, where 80% of the current office inventory of some 2 million square meters are located.

The three projects are Green Gate, built near Chirigiu market, buildings two and three of AFI Palace Cotroceni, and City Offices, a reconversion of former shopping center City Mall.

The decision to raise offices in other areas of Bucharest can be deemed as good news for traffic in the city. “I believe the development of other office areas is healthy for the city, similar to other large cities, and IT or call center companies can establish headquarters in western or southern Bucharest as well,” said Gijs Klomp, Managing Director Romania of Jones Lang LaSalle real estate consultancy.

The projects will provide almost 80,000 square meters of office space, while consultants put this year’s total office deliveries at some 120,000-130,000 sqm.

However, northern Bucharest will see building activity as well: investors are still eyeing Floreasca, Barbu Vacarescu and Dimitrie Pompeiu areas, where they will deliver 45,000 square meters of offices in three projects this year.

But filling the space will still be a challenge for developers in 2014, given that Bucharest holds around 300,000 square meters of vacant spaces at present.

“In the first half of this year, the market will still be a tenants’ one and we expect rental conditions to slightly improve,” Klomp said.

“However, in the second half, we believe market conditions will be better for owners as relocation interest will rise, expanding companies will need more space, while some foreign investors might tap Romania due to lower workstation costs than in the Czech Republic or Poland.”

(English version by Catalina Apostoiu)