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Real estate: Analysis: 30% of office area owners expect rent drops by end year

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30% of office area owners expect to have to drop rent levels by the end of the ongoing year or no later than in the first three months of next year, according to a recent study made by Colliers International, carried out among 60 office owners in Bucharest and regional cities. The study shows that the office market will have to be redefined in the  next period, with accent laid on turning offices into an area promoting innovation and collaboration in the new context.

More than  half of owners say they felt the effects of Covid 19 epidemic and 39% expect that vacancy will grow to come extent in the next 12-15 months, while 35% are more optimistic and count on stable occupancy rates.

In the first three months of the year, the transaction volume in the office market was by half compared to the over 100,000 square meters in transaction in this period of the year. But, net demand has grown slightly, from 25,000 sq.m in the first quarter of 2019 to 27,000 sq.m this year. During the emergency state period most companies concentrated on securing business and backing it by means on online work.

As for delivering new office areas, the initial plans announced for 2020 provided the delivery of an area a little over 200,000 sq.m, while Colliers International consultants estimate that most projects will be delivered this year, no later than in the first months of 2021. Moreover, over 200,000 sq.m will be delivered next year from projects already initiated, while buildings planned to be commissioned next year  will be most likely delayed for 2022-2023.

According to the evolution of demand over 2022-2023, owners could bring about 200,000 sq.m in the market in each of the two years, according to Colliers International.

“Following to the latest changes for the safe return of companies to offices, the office market will have to continue to be redefined, to ensure areas promoting innovation and collaboration in the new context,” according to Colliers International consultants.

They say the office will remain the central element of companies, but because the need for intense collaboration and social interaction in the professional area are hard to be satisfied online, the effects of this period are expected to reflect on the way of work and the organization of the work space. 

Companies adopt an attitude of the wait and see type to surpass this time of uncertainties, consultants say.

Colliers International Group Inc. is one of the global leaders in the field of real estate consulting and investment management, with operations in 68 countries and with over 15,000 specialists. In 2019, corporate incomes were over 3 billion dollars (3.5 billion dollars) with managed shares of 33 billion dollars.

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