Office rents in Bucharest see one of the highest growth rates in Europe

Office rents in Bucharest increased by up to 15.8% in the last 12 months (June 2023 vs. June 2022), with the prime headline rent in the CBD area (Piata Victoriei - Aviatorilor) reaching EUR 22.00/sqm/month, according to data from real estate consultancy company Cushman & Wakefield Echinox. Bucharest, therefore, registered one of the most significant increases in prime office rents in Europe (which saw an average rental growth of only 5.6%), driven by inflation and construction costs.

The growth rate recorded in Bucharest was only surpassed by the ones seen in Dusseldorf (Germany) - 26.8% and Rotterdam (Netherlands) - 22.4%. Moreover, the Romanian capital experienced the highest rental spike when also compared with the other capital cities across Central and Eastern Europe – Prague (5.6%), Sofia (6.7%), Budapest (2%), Warsaw (2%), and Bratislava (2.9%).

However, office rents in Bucharest are still lower than those in Prague, Warsaw and Budapest.

“The rental levels were still moving upwards in Q2, thus continuing a trend that began in early 2022, reaching the highest benchmark of the last 7 years. The rising inflation, the increase in construction costs, as well as the uncertainties regarding the authorization and permitting of new projects in Bucharest were the main drivers of this evolution in a market where the prime headline rents had previously remained constant in the range of EUR 18.50-19.00/sqm/month between 2015 and 2022,” said Mădălina Cojocaru, Partner Office Agency Cushman & Wakefield Echinox.

“The inflationary pressures will still be felt on the market, even if prices have started to stabilize this year. Given the sustained demand and the limited supply (especially from 2024 onwards), we can expect the upward rental trend to continue going forward,” she added.

The current under construction pipeline in Bucharest is relatively low at 112,000 sqm GLA, but there are also around 300,000 sqm of other projects in different planning stages, many of them depending on a solution regarding the present urbanistic blockage at municipality level.

The new office supply in H1 totaled 70,000 sqm and increased the office stock in Bucharest to 3.38 million sqm.

Bucharest is the 4th largest office market in Central and Eastern Europe, after Warsaw (6.25 million sqm), Budapest (4.33 million sqm), and Prague (3.85 million sqm).

Regarding the transaction activity, tenants leased a total area of over 190,000 sqm in H1 2023, up 21% when compared with H1 2022, while the net take-up had a share of only 50% in the analyzed period. If this level is sustained in H2 as well, 2023 could reach a record level of demand, potentially surpassing the previous record of 390,000 sqm set in 2019.