Tensions between office owners and tenants are rising in Romania
Some office building tenants in Romania have realized that they no longer need so much space but are stuck in contracts signed during the boom period, which generates tensions - Profit.ro concludes after talking to investors, tenants, and consultancy firms, most of whom understandably (and relevant for the situation) preferred remaining anonymous.
This is why it is more common to have the contracts amended or renegotiated, then terminated.
Some contracts stipulate the tenant is liable for the whole rent for seven years if it decides to terminate the contract in advance, after less than a year.
The tensions between landlords and tenants escalated once companies such as Vodafone, Thales, Orange, or Genpact decided to lease to third parties a quarter of the space owned, a move that would bring them back about EUR 2.6 million per year.
"Some very large international tenants want to terminate their leases, arguing that the definitions in the contracts are no longer valid and the leased area is no longer necessary," said the director of a large real estate investor on the Romanian office market.
Lawyers consulted by Profit.ro admit that such clauses are common in contracts in Romania and say that, in some situations, it can be proven that they are abusive. However, the tenants prefer alternative solutions.
Florian Nitu, the managing partner of local law firm Popovici Nitu Stoica & Asociatii, says that, in 2020, he received requests to terminate contracts, more than in previous years - but less than requests to assist with new contracts, extensions, or amendments. According to him, contracts can be amended, assigned, in whole or in part, terminated, in many cases through litigious procedures.
Leasing to a third party is a relatively common option, says Nitu.
(Photo source: Dreamstime.com)