Bucharest Office Rents Fall On Fewer Clients - King Sturge

The average rent for prime office spaces dropped 13.6% on the year in 2009, from EUR300 per square meter to EUR264 per sqm, a similar level with the one recorded in 2006, the report said.

King Sturge's analysts forecast further rent falls in the short-term with vacancy rate still rising.

The occupier market was subdued in the first half, with just 30,000 sqm taken up in the city, compared to 255,000 sqm in the whole of 2008.

King Sturge estimates the overall vacancy rate for Bucharest office premises has increased significantly from 4% at the end of 2008 to a current 10%, with higher rates registered closer to the city borders.

"Despite the anticipation of demand picking up over the second half of the year, it is very unlikely that take-up will reach the level achieved last year," the report said.

According to King Sturge, companies began to migrate towards smaller and cheaper office spaces.

Therefore, the vacancy rate is seen at 10% by year-end, on the backdrop of new deliveries.

"The development pipeline has some 300,000 sqm scheduled for delivery to the market in 2009, with 134,000 sqm already delivered in the first half," according to the report.

Office stock in Bucharest, estimated 1.4 million sqm, is still very modest compared with neighbouring countries, and new construction has boomed in the city, King Sturge said.

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