Bratislava Office Market Overview

Stock & Supply

Currently, there is over 2.07 million sqm of A+, A and B grade office premises on the Bratislava market. The A+ and A class buildings represent 56% of the market share and B class buildings represent 44%. During the third quarter of 2023, two new buildings were completed – Pribinova 34 and Pribinova 40 – adding 38,500 sqm to the market. Both buildings are located in the CBD.

Vacancy

The overall vacancy rate in Bratislava has creased from 11.60% to 13.82% compared to the previous quarter. The lowest levels of choice were recorded in Old Town (8.18%), followed by South Bank (8.45%), Inner City East (9.48%), Outer City (15.59%) and CBD (15.99%). The highest levels of vacancy are in Inner City South (27.37%) and Inner City West (34.44%).

Under Construction

Currently, there is 1 office buildings under construction planned to be completed by the end of 2023, delivering 25,000 sqm of office space area to the Bratislava market stock. The most active area in terms of construction in Bratislava is the CBD and its surroundings.

Demand

In Q3 2023, the total take-up reached almost 39,900 sqm. The three largest transactions in the second quarter of 2023 were the following: a new lease (5,300 sqm) followed by another new lease(3,590 sqm) and a renegotiation (3,570 sqm). During the third quarter of 2023, the majority of tenants came from sectors such as: Professional Services (23%), Consumer Goods and Pharma/Medical sector (both with 15% share). New leases represented 57% of all transactions, over 37% were renegotiations, and expansions represented less than ca. 6%.

Rents

Prime headline rents are slightly increasing, and they are in the range of 14.00 -17.50 €/sqm/month. Service charges have dramatically increased up to around 5.00 €/sqm/month or even more, depending on the building grade. Standard incentives are currently being reconsidered by all landlords. However, one month rent free for each year of the signed lease remains to be a relevant figure. Additionally, tenants with significant size and brand name have potential to negotiate financial contribution covering nearly full fit-out standard from numerous landlords. The outcome depends on tenant’s prosperity and agent’s negotiation skills. Generally, availability of incentives is linked to the building’s vacancy and other offers available in the neighbourhood.

Forecast for H1 2024

Recent major spike in office vacancy was mainly caused by delivery of two new buildings and relocation of one of the largest IT companies. We expect significant decrease of vacancy in 2024. There will be very few options of available premises in brand new A+ office developments. Additionally, office pipeline is significantly limited for the period 2023-2025. Brand new office projects with GLA of over 10,000 sqm are expected to be delivered not earlier than in 2026. Moreover, we are expecting that approximately 50% of the newly delivered office space around the year 2026 will be preleased soon due to the large shortage of supply of A+ buildings.

Another point to mention is that tenants will pay close attention to identify all cost saving elements of their current lease before relocating to new office space. The topic about rent indexation and postponing indexation have never been so demanded by tenants as it is now. These factors together with expensive fit-out costs have a negative impact on the demand for new offices. Lastly, we see an ongoing trend in demand for office buildings with modern architecture, latest technology and green certification. Older buildings which are not kept up to date can be considered for re-development into residential buildings.

Investment Market

Office market in Slovakia continues to exhibit resilience and proves that a quality A-class product can attract interest, currently driven mainly from domestic investors. There were three significant office transactions in Bratislava closed in 2023 to Q3 with total investment volumes at ca. 185 million €. In all the transactions was active a domestic capital in a role of buyers. Nevertheless, the investment office market is not without challenges which will continue to have an influence on investor sentiment, creating opportunities for investors who can navigate the evolving landscape.

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