Office real estate in CEE

A comparison of office vacancy rates in CEE cities shows great differences as well as trends in the opposite direction. The usual evolution regarding the development of a “new” market will show very high rental yields and low vacancy rates due to low supply during the initial phase. The second phase shows many newly built projects, rents are declining and vacancy rates are rising. The third phase finally gives way to the so-called pork cycle. Rents and vacancy rates change in a wave-like motion but only to a minimal extent.

In nearly all CEE cities the economic crisis left its mark: the vacancy rates have risen, at least in the short-term, considerably. For example in Budapest the vacancy rate in 2003 was 19%, it sank to 11,3% in 2007 and escalated to 13,6% in 2008 due to the crisis. Similar in Bucarest: 2003: 9,1%, 2007: 2,3% and 2008: 4,6%. The economic crisis could also be seen in the Praha real estate market: 2001: 12,7%, 2007: 5,7% and 2008: 8,4%.