The main reason is the increasing adoption of hybrid working and flexible office use in the post-pandemic period, according to the analysis carried out by the Office Advisory department of iO Partners. Before the pandemic, finding an office to sublease was seen as an opportunity, in most cases the space was either already furnished or required smaller investments from future subtenants. However, as of 2021, the availability of these spaces on the office real estate market has increased to the level of 65,000 sq m.
By comparison, this volume was higher than the total stock of the office sub-markets in the south or east of Bucharest, and represented approximately 2% of the total office stock in Bucharest. Most of the office spaces in the market that were to become available for subletting were arranged before the onset of the pandemic, in 2020, when Bucharest recorded the highest level of demand for office spaces.
This was due to a large number of companies that expanded their area, as a result of increased activity, but also new companies entering the market. During the COVID period, a large part of these spaces were not even used by employees, and those that ended up being available on the sublease market were mostly newly furnished offices. Despite this strong supply, only up to 12% of the space offered for sublease was transacted in 2021, with this level falling further in 2022 and 2023.
The companies were bound by the leases signed in 2019, most of which had an expiry date in 2024, at which point the surface area of the office spaces could be adjusted without penalty, depending on the current needs of the new ways of working. Therefore, subletting was a viable option before the contract expiry date to avoid penalties for returning the space to the owner during the contract period.
The volume of office spaces offered for subletting varied depending on the activity sector of the companies offering them and depending on the chosen hybrid scenario. However, BPOs represented the largest share of this market niche, with up to 30%, followed by the computers & hi-tech sector, with 25%, and professional services, with 21%.
“I am happy to convey that iO Partners Romania has advanced the development of the specialized Workplace Management services and strategies department, supporting companies throughout this work environment change experience, from the change curve to eliminate resistance to the evaluation of post- occupation. We support companies in setting up the new normal. The workplace should be agile, fluid, connective and adaptable over time as it supports the health of the organization and connects with corporate culture and purpose. The success of a working day does not depend on a fixed location, it has become a process structured according to activity and needs. Habit does not mean excellence. ”, says Claudia Cetățoiu, iO Partners Corporate Transaction Director.
This triggered in 2023 a high availability of spaces for sublease in the Centru-Vest and Floreasca-Barbu Văcărescu office sub-markets, followed by the West office sub-market, where most of the aforementioned sectors are concentrated. It was a challenge for market dynamics and for landlords, but at the same time it provided more opportunities for tenants looking for space. Real estate can be one of the biggest cost drivers for businesses after payroll.
It is also becoming more and more difficult to find a balance between long-term rental contracts, taking into account the increased rents due to indexation, the increased cost of construction materials, remote and hybrid work, etc. Therefore, for an adaptation to the changes in the working regime, a complete analysis of how the office is used daily is needed, which collaboration spaces are used the most, what is the share of working from home on the days of the week, how are they used actual workstations, what technologies could be implemented, etc.
