CEE Office Market Figures
Q1 2024
FIGURES | CEE REAL ESTATE INVESTMENT | Q1 2024
Total stock in CEE capitals amounted to 28.5M sq m following only 172,000 sq m of new completions recorded in Q1 2024. This is a 32% decline compared to same period last year and fits the trend of last quarters when the sector showed already modest development activity. Looking ahead, we expect total delivery volume to fall to 700,000 sq m in 2024 (from 986,000 sq m last year) and development pipeline doesn’t seem to recover any time soon. Notable exceptions are the SEE markets this year and the Baltics in 2026. Pipeline in Budapest remains inflated by public developments only. We forecast development volume to fall further to ca. 605,000 sq m in 2025 and to potentially under half a million in 2026 – given the very low volume of new commencements.
The overall U/C volume stands at 1.6M sq m across the region; however, actual availability in the pipeline is only 1.1M sq m. While actual vacancy rates have moved out in a number of market, future availability ratios are modest (1-3% of the total stock) in core CEE capitals. Cities in Baltics and SEE are witnessing a different trend with increasing vacancy due to higher relative pipeline volumes. Submarkets within cities continue to show large differences in vacancy rates as general demand profile weakens and tenants optimize their office occupation strategies.
Vacancy rate in CEE averages at 11.0% (marginally up q-o-q and y-o-y); however, pattern differs. Vacancy rate in Bucharest and Warsaw declined in a year, it remained flat in Prague (marking the lowest rate in CEE) and increased in Bratislava and Budapest. Smaller markets marked increase in vacancy rates – with the exception of Ljubljana and Zagreb.
Office Stock and Vacancy Rate
Total Stock (left)
Vacancy Rate (right)
Office Completion and Take-up in 2024 Q1
Office Pipelines Under Construction (Until 2026) in CEE
Office Asking Rents (Average - Prime)
Office demand weakened to 352,000 sq m in Q1 2024 (from 408,000 sq m) with biggest declines marked in Warsaw and the Baltics, whereas net demand in Budapest and SEE improved compared to Q1 2023. Beyond take-up, renewals continue to be a key driver of overall leasing demand: in
CEE-5, lease prolongations made up half of the total leasing activity, whereas pre-leases accounted for a mere 2%.
Looking beyond leasing activity, quarterly net absorption was negative in CEE-5 but strongly positive in Baltics and SEE – nevertheless year-end stock revisions and change of property use also impacted total occupied office stock, most remarkably in Warsaw. Occupied office stock here has remained practically flat in two years despite completions due to withdrawals of obsolete buildings. This trend can be more articulate in other core markets as well in the coming years. Annual-to-date net absorption continues to be strongest in maturing markets of Baltics and SEE, while core markets marked moderate levels between 24,000 (in Warsaw) and 77,000 (in Bucharest). Annualized net absorption was zero in Budapest only.
Rental levels continue to show diverging trends: prime levels remained stable q-o-q and increased by 2-6% y-o-y, but average rental rates show a more diverse picture as the lower end of asking rents moved slightly down in half of the markets (on an annual basis). Warsaw is catching up with Prague in prime rental levels and these two cities are expected to drive prime rental growth in CEE due to limited future pipeline. Prime end also increased in Bratislava (up by 11% in a year). We expect more segmentation in asking levels to arrive to smaller markets as well.
Contacts in CEE
Gábor Borbély
CEE and Hungary
gabor.borbely@cbre.com
© Copyright 2024. All rights reserved. This report has been prepared in good faith, based on CBRE’s current anecdotal and evidence views of the commercial real estate market. Although CBRE believes its views reflect market conditions on the date of this presentation, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE’s control. In addition, many of CBRE’s views are opinion and/or projection based on CBRE’s subjective analyses of current market circumstances. Other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE’s current views to later be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change.
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13,8%
14,3%
13,8%
7,5%
11,0%
9,0%
9,9%
Completions
Take-up
2024 Completions
2024 U/C
2026 U/C
2025 U/C
*SEE: Belgrade, Zagreb, Sofia, Ljubljana
**Baltics: Tallinn, Riga, Vilnius
Source: CBRE, 2024
Average rents are quoted as the market average of asking rents quoted for the vacant space in the individual city.
Source: CBRE, 2024
Lukasz.Kaledkiewicz
CEE Offices lukasz.kaledkiewicz@cbre.com
Katarzyna Gajewska
Poland
katarzyna.gajewska@cbre.com
Daniela Gavril
Romania
daniela.gavril@cbre.com
Jana Jovanović
South-Eastern Europe jana.jovanovic@cbre.com
Jana Prokopcová
Czech Republic jana.prokopcova@cbre.com
Peter Slovák
Slovakia
peter.slovak@cbre.com
Ieva Vitaitytė
Baltics ieva.vitaityte@cbre.lt
Hungary
Figures by Country
Poland
Slovakia
Czech Republic
Romania
Croatia
Bulgaria
Slovenia
Serbia
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Baltics