Strong demand for office space in CEE
According to the latest data from CBRE, strong office leasing activity during 2013 was registered across Central & Eastern Europe (CEE).
Nearly all of its markets saw leasing activity increasing and reaching results above the recent five year average. A high level of renewal activity combined with increasing pipelines across the region have pushed-up vacancy to over 10 percent and generally put downward pressure on rents. CEE has become a focus as a center of BPO activity. This, combined with growing local needs for office space is likely to keep driving the markets in the years to come.
Joerg Kreindl, Head of CEE Occupier Services, CBRE, commented: “An increasing amount of corporate decision makers are responding to signs of economic improvement across Europe by shifting focus away from pure cost management to future growth opportunities. We have seen an enormous increase in lease activity across the region, especially in Poland (over 990,000 sqm leased in 2013) and Slovakia, where our Office Agency Teams have secured 25 percent (Poland) and 45 percent (Slovakia) market share respectively. In both markets, CBRE achieved clear market leadership. Also, for the whole CEE as a region, CBRE leased most sqm and achieved clear market leadership in 2013. We have been involved in the largest deals in the region such as Polkomtel in Poland (23,000 sqm) or a leading Global Technology business in Romania (22,000 sqm). CBRE Office Agency Teams across CEE leased together more than 370,000 sqm of office space.”
Despite such positive signs, cost control remains a priority for corporates. The recent EMEA CBRE European Occupier Survey1 shows that almost three quarters [72 percent] of all negotiated leases relate to lease renegotiations in the past twelve months [compared to 45 percent in 2012]. Occupiers use this measure to ‘lock in’ deals while office rents are at, or close to, the bottom of the market. However, such efforts to reduce costs are likely to diminish as the recovery continues.
Joerg Kreindl, Head of CEE Occupier Services, CBRE, added: “While financial objectives still govern the corporate occupier landscape, increasingly there is a greater desire to look more positively into the future. The effect is a greater alignment between real estate activities and broader business objectives. As corporate real estate teams become more strategic and client focused, scope remains for the trend of outsourcing to persist.”