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Office Pulse Q4 2020

Key market findings as of February 2, 2021

  • Modern office stock Bratislava stood at 1.92 million m2 by the end of Q4 2020
  • The A class buildings represent 64% of the market share of B class buildings represent 36%
  • In Q4 2020 there were two office buildings delivered in Bratislava
  • The overall vacancy rate amounted to 11.13% in the fourth quarter of 2020

Stock and Supply

Currently, approx 1.92 million m2 of A and B grade office premises figure on the Bratislava market. Buildings with certification as green/suitable - LEED or BREEAM ratings take almost 34% of the total stock - approx. 637,00 m2. The A-class buildings represent 64% of the market share and B-class buildings represent 36%.

There are currently 6 office buildings under construction planned to be completed by the end of 2021, delivering almost 78,100 m2 of office space ara to Bratislava market stock.

In Q4 2020 two new office buildings was completed in Bratislava, adding 26,300 m2 of space to the market - Pradiareň 1900 in Bratislava II and Tower 5 in Bratislava III. The most active areas in terms of construction in Bratislava are locations surrounding either Eurovea or Nivy where we expect new CBD to be created.

Demand

In Q4 2020, the total take-up reached almost 65,800 m2 which compared to the previous quarter represents an approximately 11% increase. The three largest transactions in the first quarter of 2020 were the following: The Mill - prelease (12,000 m2) followed by a new lease in Park One (6,540 m2) and another pre-lease in Klingerka Office (6,160 m2). There were 11 other transactions which exceeded size of 1,000 m2. 

During the last quarter of 2020 majority of tenants came from sectors as: Consumer goods (31%), followed by Professional services (18%) and Pharmaceutical/Medical (14%). New leases represented almost 36% of all transactions, over 33% were pre-leases, 27% were attributed to renegotiations and expansions represented less than 4%. 

Vacancy

The overall vacancy rate in Bratislava has increased from 10.05% to 11.13% since the previous quarter. 

The lowest levels of choice were recorded in Bratislava I (7.12%), followed by Bratislava II (7.84%), Bratislava V (12.68%) and Bratislava II (14.06%). The highest vacancy rate of 20.44% was recorded in Bratislava IV. 

Rental levels

Prime headline rents are stable in the range of 14 - 16.00 Eur/m2/month. Rental level in the CBD is ranging between 14 - 16.00 Eur/m2/month. City center rents are also table: 12 - 16.00 Eur/m2/month. Inner-city rents ranging between 11.50 - 14.00 m2/month and South bank between 12.50 - 14.50 Eur/m2/month. Rents in the outer City also remained at 10.00 - 12.00 Eur/m2/month. All of these numbers refer to prime levels achieved in a limited number of prime properties. Secondhand products stand at approximately 1.00 - 2.50 Eur/m2/month below the mentioned ranges.

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. The final outcome depends on tenant´s prosperity and agent negotiation skills. Generally, the availability of incentives is linked to the current vacancy rate in the building and the offer of other competitors in the neighborhood. 

Forecast for H1 2021

Weaker demand for offices and general market uncertainty will continue at least until the end of H1 2021. New aggressive Covid-1í mutations are causing difficult country-wide lockdowns, limiting market activity. We observed a growing trend in the sublease market, which is a natural result of current pandemic situation.

Landlords continue to evaluate the potential impact of Covid-19 on their tenants. Their main goal is to secure stable and diversified tenants within their buildings. Higher utilization of home office created strong pressure to downsize traditional offices across all industries and reorganize current workspace. 

Many studies and surveys however show, that traditional office space will stay highly relevant in the long run especially for complex collaboration projects, productivity and corporate culture. Flex space operators are experiencing higher demand for temporary solutions but offer them at a premium price (reflecting the cost of flexibility).