Tuesday, July 7, 2020
Home News General 2019 set to deliver over 900,000 sqm of new modern space to...

2019 set to deliver over 900,000 sqm of new modern space to the Bucharest market

Real estate development activity could double in 2019 compared to 2018, if all the projects scheduled for this year are completed, revealed data from JLL’s latest Bucharest City Report.

According to the data announced by the developers, over 900,000 sqm of modern spaces would be completed this year, of which about half represent industrial and logistics projects.

The stock of industrial and logistics in Romania will thus rise to 4.2 – 4.25 million sqm, an increase of over 10 percent compared to 2018. At mid-year, the stock exceeded the threshold of 4 million sqm, of which over 2 million sqm, is in Bucharest.

The development activity in this sector is encouraged by the evolution of the demand of the last three years, between 2016 and June 2019 being contracted over 1.7 million sqm of industrial and logistics spaces. For comparison, between 2011 and 2015, about 1.2 million sqm of industrial and logistic spaces were rented in Romania.

For the whole of 2019, approximately 400,000 sqm of industrial and logistic spaces are expected to be completed. However, considering that 180,700 sqm have already been delivered in the first half of the year and almost 230,000 sqm are under construction, the deliveries will be more than 400,000 sqm initially estimated.

Due to the strong demand and the very low weight of speculative projects, the unemployment rate remained at 6 percent.

Double deliveries on Bucharest office market

On the Bucharest office market, 2019 will be a record year in terms of new deliveries, the announced volume being 333,500 sqm, more than double the projects completed in 2018.

Although there were strong new deliveries both in Q2 and Q1 vacancy decreased slightly form roughly 8 in Q 1 to 7.5 percent at the end of Q2. This is because by the time the buildings were delivered they had 80 percent to 90 percent occupancy, or even 100 percent in some cases, such as Renault Bucharest Connected and The Mark. Therefore, the new buildings did not add up much to the overall vacancy rate.

On the other hand, demand was also strong during the first half and there were almost no major relocations in the market during this period, except for Renault, who moved from Pipera North to the western part of the city in the new project Renault Bucharest Connected, build on demand.

The office stock in Bucharest was estimated at over 2.84 million sqm at the end of June, and by the end of the year it will approach the threshold of 3 million sqm.

Over 150,000 sqm is expected to be delivered in H2. Therefore, the vacancy rate might slightly increase to around 8 percent. However, even though at the end of Q2 the projects under construction, to be delivered in H2 had a pre-lease rate of roughly 40 percent on average, with significant differences from case to case, considering that there are several large transactions pending, if those will be concluded in time, the occupancy rate will also go much higher by the time the buildings will be completed. Therefore, new deliveries are not expected to add much to the overall vacancy rate in H2.

The lack of new retail projects will be compensated for in the second part of the year

Following the same trend as in Q 1 there were no new major shopping centers or retail parks delivered in Q2 2019. However, during the period, NEPI Rockcastle finished the new 10,000 sqm expansion of Shopping City Sibiu

Almost all major deliveries for 2019 will concentrate in the second half, with close to 166,000 sqm expected to be completed, compensating for the lack of new projects during the first half of the year.

2019 will be characterized by a considerable number of extensions and to a lesser extent by new projects.

The largest new project expected to be delivered by the end of this year is Festival Shopping Center in Sibiu. The 42,200 sqm shopping center is developed by NEPI Rockcastle, the largest shopping center developer and owner in Romania. In Bucharest, there are no new shopping centers to be delivered this year.

Most Popular

Globalworth has leased over 25,000 sqm during the pandemic

Globalworth's portfolio in Romania has been consolidated by the prolongation and/or the extending of the lease contracts for a period of 3...

Ingka Centres launches new online community and marketplace – LIVAT Online

Ingka Centres has launched LIVAT Online, a new online community and marketplace that brings customers and tenants together for shopping, lifestyle and...

Cushman & Wakefield and Matterport enter into global agreement accelerating virtual commercial property marketing

Matterport, the market leader for spatial data capture, announced a global agreement with Cushman & Wakefield. With Matterport...

ABB to move to Monopolis in Łódź

ABB will relocate into the newly-developed offices of the Monopolis complex in Łódź. The leading technology company has just signed an agreement...