Tenant interest for new office spaces in Romania increased in the first half of the year, generating a total take-up of 128,500 sqm, out of which the net take-up represented some 55,000 sqm, up 40% year-on-year, according to the Midyear Market Review published by Colliers International Romania.

“H1 2014 was definitely a good start of the year in the office market, given the fact that the transactional activity – a total take-up of 128,500 sqm - surpassed for the first time the peak levels registered in the corresponding periods in 2007 (115,000 sqm) and 2008 (125,000 sqm). After five years of precaution, the market shows evident signs of confidence and growth, with new developments on the horizon, spurred by increased demand for new entries, expansions and consolidations,” said Georgiana Andrei, Director of Colliers International Romania Office Agency team.

Some of the main market trends indicated in the report are the continuing dominance of IT&C companies, a significant uplift in pre-leasing transactions and new companies set to enter the local market in the following year.

According to Colliers, a significant percentage of the new demand was represented by new names entering the local market, such as Kellogg and Lenovo. The net take-up is expected to continue its upward trend, as a wave of expansion from IT&C companies, new BPOs and side businesses from industrial production and agriculture that will bring new demand in the second half of 2014. Newcomers from the US and China have been actively prospecting the local market and are expected to close deals in the following year.

In the first half of this year, the pre-completion transactions also marked a strong comeback, accounting for 32% of the overall market activity. The IT&C sector accounted for most of the transactions.

In terms of supply, the quality office stock in Bucharest totaled 1.73 million sqm at the end of the first six months. A total of 79,000 sqm were delivered in this period, contributing to a 5% increase in stock. Over half of this volume was available for lease at the end of the semester.

As demand outpaced the delivery activity over the past 12 months, the vacancy rate dropped slightly from 18% to 17.2%. According to Colliers, some of the healthiest areas in Bucharest in terms of vacant spaces are Charles de Gaulle, Center West and Dimitrie Pompeiu, each boasting rates between 5% and 8%. Other 42,000 sqm are expected to be delivered by the end of 2014, most of which is however leased already. The new deliveries are expected to increase the stock in the already established Barbu Vacarescu Floreasca area, but also in Politehnica area in Romania’s capital.

Colliers doesn’t expect rents to further decline, as the bottom line was already reached for many of the sub-areas.

Irina Popescu, irina.popescu@romania-insider.com