IT&C and computer companies were the most active on the office space rental market in Bucharest, generating over 40% of demand in the first half of this year, followed by the banking and financial sector, with 25% of the area contracted and by medical and pharmaceutical companies, with about 9% of total take-up.
In the first half of the year, the office space rented in Bucharest totalled approximately 100,000 square meters, of which IT&C and computer companies contracted about 40,000 square meters, banking and finance - 28,000 square meters, and pharma companies rented over 8,500 square meters. Thus, after almost 50% reduction in Q1 2020 compared to Q4 2019, the decline in office demand in Bucharest continued during Q2, albeit at much lower rate of 19% when compared to the previous quarter. Total gross transaction volume reached approx. 44,500 m² in Q2 and almost 100,000 m² in H1 2020.
Compared to the first half of last year, demand fell by half due to the COVID-19 crisis.
The average transaction size in Q2 2020 was approx. 1,400 m².
Net take up accounted for 16,000 m², or 36% of gross take up during the period. Compared with net take up in Q1 2019, it stood at little over 33%. JLL was the market leader in Bucharest, with over 36% market share in the first half of the year in terms of transactions intermediated.
” Following strong 2019, the expectations were high at the beginning of the year. Nevertheless, the onset of the COVID-19 pandemic in Europe towards the end of Q1 had a major impact, starting with the end of Q1 and to a larger extent during Q2. As companies adjust with the new operating scenario generated by the pandemic, we can expect demand to stabilize and perhaps see a modest growth in Q3”, commented Alexandru David, Research Analyst JLL Romania.
In terms of vacancy rate, Q2 experienced a slight increase, from 8.7% in Q1, to approximately 9.3%.
About 214,000 square meters of offices will be delivered in 2020 in Bucharest, so that the modern stock will exceed 3 million square meters
After strong deliveries of 78,200 m² during Q1 2020, the pace slowed down in Q2 and the office buildings completed during the period added 27,900 m² to the modern office stock in Bucharest. The projects delivered in Q2 include The Bridge phase 3 in the Center-West sub-market with approx. 21,200 m² GLA, and the Zone 313 in the Floreasca-Barbu Vacarescu sub-market, adding 6,700 m² GLA.
Deliveries in Q2 2020 represent approximately 33% of the volume recorded in Q2 2019, when 85,500 m² were added to the market. Several important deliveries are waited for the second half of 2020, totaling 108,000 m². Thus this year the modern stock would increase by 214,000 m², exceeding the milestone of 3 million m² in Bucharest. Among these the largest are Globalworth Square with 25,700 m², and One Tower, adding 23,600 m², both situated in the Floreasca – Barbu Vacarescu sub-market, as well as the second and third buildings in Campus 6, adding another 36,900 m² to the Center – West sub-market.
” Considering the impact of the ongoing COVID-19 pandemic, combined with significant new deliveries in the market expected within the next two quarters, we estimate that the vacancy rate is likely to increase by the end of 2020”, commented Alexandru David, Research Analyst JLL Romania.