10 short questions – 10 short answers for the Romanian office market in Q1, 2011
“Is it moving?”
– Yes, it does. Much less than how some people try to convince us, but this segment had several transactions during the first quarter of the year.
“What kind of transactions did we have?”
– Mainly three types: The relocations for lower cost, the leasing of top locations and the rest of the market, where almost all is measured by price.
“Does this mean that the market has exited the crisis?”
– Not really, but this is an important indication for the market’s direction. The market awarded the best locations and projects, asking from all the rest to significantly lower their price expectations.
“How long is this going to last?”
This is a procedure that I expect it to be concluded at the end of next year and the first half of 2013.
“When can we forecast a significant change in the market’s direction?”
– In the first half of 2013, maybe a quarter before or a bit later.
“What is the mechanism that will seal this change?”
– The relocation projects will end during next year, while in the same moment the deliveries of A Class spaces will be significantly lower than 2009 and 2010. In the same time we expect the Romanian economy to recover and this will create an additional demand. So, more demand, less supply and less relocation projects will change today’s standards.
“Are we going to see the whole market benefiting?”
– No, definitely not. First of all, we should remember that the next positive circle will have nothing to do with the previous one. Secondly, keep in mind that the demand will come from different categories of companies than in the past. Last but not least, everyone is searching for “quality at affordable price”. In order for everyone to benefit, we need to reach the bubble of 2007 – 2008, something which is unlikely to happen before 2015 – 2016 (if it ever happens during this decade).
“We still see high prices in the market reports. Are they true?”
– The top properties have managed to maintain their leases at respectable levels. Not as high as some reports state, but not far from these figures too. What is different is the real pricing for B Class properties or locations, where one can find today many opportunities, at lower prices comparing to what some analyses present. But still, there are 3 companies whose analyses are accurate and I follow them carefully.
“So, is it good for a company to relocate now?”
– If you have not done it already, this year will probably be your last excellent opportunity to do it, reaching your expectations and demands in most of the cases.
“Is there any possibility for the market to delay much more?”
– Only if the European and world economy enters in a new recession. Then Romania will be influenced as well, the companies will become very careful and defensive again and everything will be postponed for the near future.