Demand for office spaces surged by over 60 percent, with transactions up to 1,000 sqm being the most prevalent in Q1

The office market in Bucharest has shown a sustained demand growth in Q1, both in terms of the transacted volume and of the average lease size, amid an extremely limited new supply, according to data from the Cushman & Wakefield Echinox real estate consultancy company.

Companies leased 91,000 sqm of office spaces in Bucharest in Q1, corresponding to a significant 63 percent y-o-y increase. A number of 55 transactions were concluded during the analyzed period, with an average deal size of 1,657 sqm, twice the level of recorded in Q1 2023.

Transactions pertaining to areas of up to 1,000 sqm accounted for the largest share (65 percent of the total), followed by those ranging between 1,000 – 2,000 sqm (16 percent). Seven deals were signed for offices with an area between 2,000 – 5,000 sqm, while three exceeded 5,000 sqm.

“After a record year in terms of leased office spaces in 2023, the Q1 data indicates a stabilization of demand on the market. A major concern is the limited number of new projects scheduled for delivery in the following 24 months, which will constrain the supply of high-quality office spaces. Only three projects are currently under construction in Bucharest, with a total area of 88,400 sqm. Among these, AFI Loft (located in the Center – West area of the city) is the closest to completion, with the largest being the 2^nd phase of the Timpuri Noi Square development (50,000 sqm) which started construction in Q1,” explains Mădălina Cojocaru, Partner Office Agency at Cushman & Wakefield Echinox.

The net take-up had a low share (38 percent) in the total activity, in line with the trend observed during the past 3 years, as the major tenants preferred to consolidate their operations and renew their contracts in the existing premises. The vacancy rate has slightly decreased to a level of 14.4 percent, from 14.8 percent in Q1 2023 and from 14.7 percent at the end of last year. This indicator is expected to compress going forward, mostly on the account of the very limited short and medium – term pipeline.

BPO companies were the most active in terms of the leased areas, accounting for 36 percent of the total, representing entirely renegotiations of existing contracts. IT&C firms contributed to nearly 21 percent of the total volume, both through the renewal of existing premises and through new lease or relocations.

There has been no significant movement in terms of rental levels in Bucharest at the beginning of 2024, with the prime headline rent in the CBD area remaining at €22.00/ sqm/ month.