In an exclusive interview with Costin Nistor, Managing Director of Fortim Trusted Advisors, CIJ EUROPE explored the key challenges facing the office market today. The current state of Bucharest’s office market presents a mix of positive developments and ongoing challenges, according to industry insights. While investment volumes and tenant interest signal optimism, limited new developments and structural issues highlight hurdles ahead. The office market in Bucharest has continued to attract significant investment. “This year, we expect to exceed €1 billion in investments, a milestone we’ve consistently approached or surpassed over the last three years,” an industry expert noted. This performance underscores the liquidity of the market and bolsters confidence among international investors. Major transactions in 2024, including the sale of four high-value office buildings, reflect the market’s resilience. However, the delivery of new office stock remains minimal. This year, only one significant project—Afiloft, with 16,500 square meters—will be completed, representing a fraction of Bucharest’s total office stock of 4 million square meters. The market’s vacancy rate varies significantly by location. While Bucharest’s central business district (CBD) reports a low vacancy rate of under 8%, signaling a landlord-driven market, other established areas face higher vacancies. Prime rents in the CBD have risen to €20–€22 per square meter, driven by limited supply and high demand for premium spaces. Other parts of the city, such as the west, are expected to see increased activity in the coming years due to newer office stock and good transport connections. Meanwhile, long-standing issues in the Pipera area may require innovative solutions, including property reconversions, to address persistent vacancies. Occupiers are adopting a “wait-and-see” approach in 2024, reflecting uncertainty about hybrid work trends and economic conditions. Many tenants are extending leases rather than committing to relocations or expansions. However, emerging trends include increased interest from medical and private educational institutions, as demonstrated by Genesis’s recent lease of 11,000 square meters from Petrom. The push for employees to return to offices is also reshaping demand. Some companies, particularly in IT and professional services, are doubling office space to accommodate changing policies, while others are focusing on flexible workplace models. The lack of significant new office developments in 2025 and 2026, coupled with Bucharest’s slow permitting processes, poses a challenge to its competitiveness in attracting international companies. While Bucharest remains economically appealing with a skilled workforce and growing IT&C sector, legislative and administrative inefficiencies make cities like Warsaw more attractive to investors. However, changes are on the horizon. Local capital is expected to grow with the potential introduction of Real Estate Investment Trust (REIT) legislation, enabling smaller investors to participate in commercial real estate. This could attract more institutional investors and improve liquidity in the market. Bucharest’s office market holds significant potential for growth and transformation. Investment levels are set to draw continued interest, and strategic legislative changes could strengthen local capital and international appeal. However, the market must address structural inefficiencies and ensure political and economic stability to fully capitalize on its strengths. Costin Nistor concluded: “We are in a good moment, but caution and careful planning are essential for long-term success. The future holds exciting possibilities if we navigate these challenges wisely.” ©CIJ EUROPE & RPMG