After strong deliveries during 2019, the same pace was kept in Q1, the office buildings completed during the period adding 78,200 m² to the modern office stock in Bucharest. The largest projects completed in Q1 were Ana Tower, in the North-West Expozitiei sub-market, with 34,700 m² GLA and the third building of Globalworth Campus, in the Dimitrie Pompeiu sub-market, adding 32,000 m² GLA, according with Bucharest City Report Q1 2020.
Deliveries in Q1 2020 represent approximately 84% of the volume recorded in Q1 2019, when 92,800 m² were added to the market.
Several important deliveries are awaited for the next three quarters of 2020, totaling 105,000 m². Among these is for example One United Tower, adding 23,600 m² to the Floreasca – Barbu Vacarescu sub-market, plus the third building in The Bridge projects and the second and third buildings in Campus 6, all in the Center – West sub-market, totaling over 57,000 m².
Considering the ongoing COVID-19 pandemic, combined with significant new deliveries in the market, we estimate that the vacancy rate is likely to increase in 2020.
Regarding the demand, after the strong take-up level in the last quarter of 2019, Q1 experienced an almost 50% crunch in the office spaces leased in Bucharest. Total gross transaction volume reached approx. 55,000 m².
That is nearly half the volume recorded in Q4 2019, as well as in Q1 2019. The average transaction size in Q1 2020 was almost 1,500 m².
Net take up accounted for 19,200 m², or 35% of gross take up during the period. Compared with net take up Q1 2019, it stood at 46%.
Although expectations were high at the start of the year, following a strong 2019, the onset of the COVID-19 pandemic in Europe towards the end of Q1 abruptly decreased the momentum, also seen in lower transaction volumes.
As the medical emergency unfolds, we can expect a further decrease in demand during Q2. At this time, it is difficult to estimate take up volumes for 2020, as there are many unknown factors and uncertainties related to COVID-19. In terms of vacancy rate, Q1 experienced a slight increase, from 7.7% in Q4, to 8.7%, after strong deliveries in Q1