Sluggish demand in Bucharest's office market, according to Cushman & Wakefield Echinox, followed by potential signs of a rebound in the near future.
Bucharest Office Market: A Look at the Q1 Slowdown and the Road to Recovery
Let's dive into the bustling world of Bucharest's office market and examine some interesting trends from the first quarter of the year.
In a revelation by Cushman & Wakefield Echinox, the Bucharest office market faced a substantial slump in leasing activity during Q1, with gross take-up amounting to 51,300 square meters—a whopping 44% decrease compared to the same period in 2024.
This slowdown, however, is not a reason for anguish. whispered sources suggest that the market is showing early signs of recovery and expects a flurry of significant transactions to close in the second half of 2025.
Net take-up accounted for 64% of total demand in Q1, marking the highest share since early 2022 according to the report. Interestingly, the office space demand slowed across Central and Eastern Europe (CEE), with less than 30,000 sqm delivered throughout the region in Q1. The total take-up in CEE was roughly 500,000 sqm, reflecting a 40% drop compared to the previous quarter and a 2% annual decline.
A silver lining in the gloomy picture, Bucharest's vacancy rate dropped to its lowest level since Q2 2021, currently standing at 13.6%. This downward trend is anticipated to persist throughout the year as no new medium or large office buildings are slated for completion in 2025.
Comparatively, other CEE cities like Sofia, Bratislava, and Budapest have higher vacancy rates, with Sofia and Bratislava even appearing cheaper than Bucharest regarding headline rents. Prague, however, takes the lead with the highest rents, followed by Warsaw and Budapest.
Bucharest currently boasts 132,300 square meters of office space under construction, with most projects expected for delivery between 2026 and 2027. This represents approximately 11% of the total development pipeline across capital cities in Central and Eastern Europe (CEE), which altogether have around 1.19 million square meters underway.
Developers in Budapest are leading the regional market with a staggering 472,000 square meters under construction, primarily for owner-occupied public and financial institutions. The up-and-coming projects in Bucharest are anticipated to help balance the demand, improve market conditions, and contribute to the market's recovery in the coming years.
Prime rents in the central business district (CBD) of Bucharest remained unchanged in Q1, ranging between EUR 20 and EUR 21 per square meter per month. In central and semi-central locations, rents oscillated between EUR 15 and EUR 18, whereas peripheral areas averaged monthly rates between EUR 9 and EUR 13.50. A slight increase in rents is predicted by year-end, primarily in favorable areas like the CBD and central zones, where vacancy rates are particularly low.
Overall, the bustling Bucharest office market shows a mixed picture of a sluggish Q1 and early signs of a recovery in the second half of 2025. Although specific details about major transactions and upcoming office projects for the second half of the year remain scarce, sources point towards increased investment activity, a potentially booming commercial real estate sector, and a continued decrease in vacancy rates and increased rents.
So, keep your eyes open for more updates on this exciting market!
irina.marica@our website
(Photo source: A*ndreasg/Dreamstime.com)*
(Note: This article does not contain insider information and should be taken as general market trends.)
In the jumbled landscape of Bucharest's office market, there seems to be a shift in investing strategies, especially in the realm of finance and real-estate. Despite the slowdown in Q1, experts anticipate a surge in significant transactions in the second half of 2025, signaling a recovery within the industry.
Amidst the recovery, there is a growing interest in Bucharest's commercial real estate sector, with developers planning to deliver several new office buildings in the coming years, which could potentially stimulate the market's growth further.
