CBRE & Jones Lang LaSalle: Two of the largest office schemes delivered in the Q 1 of 2014, built by OCTAGON

Hermes Business Campus - Structure 1

Total modern office stock reached in Q1 2014 2.17 million sqm,  split between class A : 0.823 mil sqm and class B: 1.347 mil sq m. In total there are around 230 properties. In addition there are over 300,000 sqm located in class C properties, without taking into account the office space within residential villas according to CBRE report “Bucharest Office Market View”.


The largest schemes due to open in the first half of 2014 were City Offices, Hermes Business Campus, Green Gate and AFI Business Park 2, which will add approximately 87,500 sq m of office space to the city’s modern office stock, according to Jones Lang LaSalle report “Bucharest Office Market Profile Q 4 2013” .

OCTAGON delivered the first of the two office building of the office complex Green Court Bucharest, located in northern Bucharest, on 2- 4 Herastrau Street. Geotechnical works performed by OCTAGON consisted in excavation, diaphragm walls D 600 and anchorages.  The Romanian construction company is now working on the execution of the concrete structure of building B. Green Court will be a green building, LEED Gold certified and will stretch over 52,000 sqm.

Hermes Business Campus- Blvd Dimitrie Pompeiu,  Nr 5-7, Bucuresti

After delivering the special foundation works in 2011, OCTAGON CONTRACTING & ENGINEERING became the general contractor of one of the largest office schemes in Bucharest: Hermes Business Campus. The office complex was built through top- down excavation method and was completed in the first quarter of 2014. Hermes Business Campus has a total leasable area of 78,000 sqm and is also a green office project, which will be audited for BREEAM (BRE Environmental Assessment Method) certification.

Q1 2014 brought a good start in terms of demand, as the total leasing activity was up 39% compared to Q1 2013, meaning over 66,500 sqm transacted office space. Pre-leasing activity was up, for the third quarter in a row, now with 40% of total take-up activity. As previously anticipated, during this quarter was registered the highest volume of pre-leases in the last 2 years – over 21,000 sqm, according to CBRE.

Hermes Business Campus- Structure 2

With an increase of demand q-o-q and low volume of new stock, vacancy rate registered a decrease from 15.1% to 15.0%. It is important to highlight the considerable difference in vacancy rate from one sub-market to another (from as low as 4.8% in West to 20.5% in Pipera).


Prime headline rent is stable in the past several quarters (18 € /sq m/month) and prime yield also stable at 8.25%.

Bucharest ranks among the least developed office market when compared to other capital cities in CEE. As such, the Romanian capital hosts just 52% of the modern office stock in Warsaw, but with an overall residential population below the one registered in Bucharest (1.7 versus 1.8 million people). By sub-market, Pipera and North sub-markets are home to 54% of the total modern stock, as these areas allowed for the development of rather big properties, on average over 18,000 sq m / property. Center area holds the biggest number of office buildings, around 74 properties, as on average a property has less than 5,000 sq m.

Green Court Bucharest- Structure 

A

Recovery is on the way for the Bucharest office market, but there are different speeds of recovery by sub-market, as evidenced by evolution of vacancy rate.
For 2015 CBRE anticipates new stock of less than 80,000 sqm, but at least another 130,000 sqm are in various stages of planning and could be delivered by end of next year.