IT sector is fuelling CEE’s booming office market

The largest supply of modern office space in CEE is in Warsaw, Budapest and in Prague, according to the Exceeding Borders report published by Colliers International. Overall, the most active tenant sectors are IT, professional services, banking and BPO/SSC.

Some 80,000 square meters of new office space was delivered to the market in Prague during the first six months of 2019, with prospects for further 122,000 square meters to be completed before the end of the year.

In Budapest, the total market vacancy rate reached a record-low level of 6.3 per cent and the Váci Corridor submarket remained the most sought-after location, both in terms of leasing activity and the development pipeline.

Warsaw saw rapid growth in the flexible and co-working space market, which offers an alternative to a long-term lease for young entrepreneurs, start-ups, freelancers and increasingly often for corporations. International co-working operators are continuing their expansion outside the capital, targeting the largest office markets in Poland.

At the same time, Bucharest has become one of the most dynamic and fastest-growing markets in the region, with the modern office stock up by over 10 per cent in the year ending June 2019. This is not only related to the labour force, which offers a nice mix of good skills and lower costs than in Western Europe, but also thanks to a very strong ITC community.

In the Baltics, the Vilnius office market is observing active development of new projects: new modern supply further heightens qualitative standards as well as brings a higher emphasis on sustainability and innovation. This goes in line with the needs and expectations of tenants and today’s workforce, likewise resulting in the entry of new international players.

The office market has continued to demonstrate consistent activity also in Tallinn. In fact, in Tallinn there is Ülemiste City, the largest Smart City in the Baltics and the biggest privately owned business campus in Northern Europe.