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OCCUPANCY STILL HIGH, EVEN WITH RECORD AMOUNT OF SPACE FOR RENT

Demand for office space not slowing down

THE DEMAND for high-standard office space in Bratislava has not eased, even though new offices are being built at a torrid pace.
The year-on-year increase in administrative premises in 2006 was the highest in history, and more new projects are in the pipeline.

THE DEMAND for high-standard office space in Bratislava has not eased, even though new offices are being built at a torrid pace.

The year-on-year increase in administrative premises in 2006 was the highest in history, and more new projects are in the pipeline.

"The year-on-year increase [in office area] was 104,200 square metres in 2006, and it was the highest increase in history," reads a report from the J&T Finance Group developer. "The total area of office premises in Bratislava surpassed 1.1 million square metres."

In 2005, only one large project was built that included high-standard office space for rent. Last year, eight buildings were finished, and four companies built buildings for their own offices.

"Construction of new business centres in Bratislava is still justified because there is still demand for modern office space," Želmíra Rácová, PR manager of the HB Reavis developer, told The Slovak Spectator.

Slovakia has had high economic growth which is naturally concentrated in the capital, said Martin Danko, the spokesman of Penta Investment Group, a financial group that entered the real estate business in 2005.

"This has a positive impact on real estate development [in Bratislava]," he said.

More large administrative projects are expected to be finished between 2007 and 2009, with more than 100,000 square metres to be added each year, according to J&T.

While the amount of office space is expected to grow in the coming years, developers do not expect the high occupancy rate of the new buildings to drop just yet.

"A continuing high demand, when four out of six building finished last year are already occupied at 100 percent or almost at 100 percent, encourages the construction of new offices," the J&T report said.

In spite of the high increase in office premises, developers have also been able to keep the rental prices over the threshold of €10 (Sk332) per square metre per month, according to J&T.

The premises are attractive for large international companies and expanding local firms which need higher quality offices, said Rácová of HB Reavis.

But there are signs that this pace can't continue. Growing competition among developers supplying the market with high-quality offices means it can take longer to find occupants now, she said.

"It pushes down prices for renting the premises," Rácová said. "Currently, average prices for renting in Bratislava range around €12.80 per square metre. In Prague it is €18, in Budapest €14, and in Vienna €20. It is estimated that the prices in Bratislava will drop to €11 in the near future."

For a long time, Bratislava did not have enough capacity, mainly in terms of suitable premises for larger firms, said Danko of Penta Investments.

"Currently, Bratislava is in fact catching up to what it missed," he said. "With the arrival of investors, foreign international corporations, the demand for administrative premises is still continuing."

In the next several years, the demand will be saturated, he said. The market will only have room for premises that offer complex services, interesting architecture and a high standard of construction.

Major office buildings on the way

Seven buildings with office space of more than 20,000 square metres are expected be finished shortly after 2007.

Name Developer Area of office premises (square metres) Estimated date
Apollo Business Centre HB Reavis 77,222 autumn 2008
Lakeside TriGránit 24,000 2Q, 2008
Digital Park II Penta Investments 55,000 1Q, 2009
Aupark Tower HB Reavis 31,600 1Q, 2008
River Park J&T Finance Group 29,000 2009
Eurovea Ballymore Properties 27,000 end of 2009
Emporia Towers Mondan Invest 22,668 2008

Sources: JT Finance Group analysis, HB Reavis, Penta Investment Group


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