Only a quarter of projects ready for occupation in H2 are pre-let

Around 25% of the total floor space ready for occupation in the second half of 2009 is pre-let, which represents a take-up rate much below the 2007-2008 levels, when pre-let spaces accounted 45-60% of total floor space completed, a BNP Paribas Real Estate report found.

Early last year, almost 75% of total office spaces in first half were pre-let. In the first half this year, more than half of the completed office space was unoccupied. Furthermore, an increasing number of projects announced for delivery this year have been put off or canceled.

The decline of the pre-let rate has triggered a decline in rents; however the real estate consultants say the pace would slow down in the second half of the year. In office space market, some 270,000 sqm are expected for delivery in the second half of the year, and only 67,500sqm have been pre-let.

“The declining demand and new projects proposed for delivery in the second half this year, will keep the downward pressure over rents. The decrease rate will be lower than the same period of last year and H1 2009, due to owners’ resilience and profitability limits for investments they made”, report said.

In first half this year, rents fell 10-15% for all types of buildings and across the entire city, with steeper declines for office buildings located at city outskirts. Furthermore, the increasing incentives offered by owners have led to a decline in basic rents by 10-15% and of net effective rent by 20-25%.

“In first half this year, the average rent of rents for Class A office spaces located in the central metro areas varied between 18 and 20 €/sqm/month. For Class B properties in attractive areas hovered near 12-16 €/sqm/month, and for office spaces in secondary areas rents varied between 10 and 12€/sqm/month”, BNP Paribas Real Estate said.

The real estate report indicates a trend towards stepped rents in office market.

“A stepped rent is deemed as an advantageous strategy as it enables tenants to benefit from lower occupational costs on a short-term, while hedging owners’ revenues on a medium to long term”, BNP Paribas said.

Office space ready for occupation in H2

Building Area Surface (sqm) Developer
Metropolis Center Center 12,780 Soravia
Olimpya Tower East 9,500 Bluehouse
Platinum Tower Center 13,000 Dagesh Group
Art BC North 15,500 Art Group
Phoenix BC Center 8,400 Phoenix Intl

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