Slovakia : Bratislava office marketAt a glance 2014
- Large scale deals boosted take-up
- Prime rents are unchanged even with better occupancy
- Investment activity at its strongest since 2006
Large scale deals boosted take-up
The Bratislava office market enjoyed particularly strong activity during the second and the fourth quarters of 2014, resulting in net office take-up almost doubling and topping the last 10 years' performance. This surge was mainly due to several large transactions such as the 17,000 m² in the Westend Gate pre-let to IBM or the 19,000 m² taken by Johnson Controls. Market activity mostly involved international companies, mainly from the finance and banking sector, followed by the IT sector. The total office stock reached 1.5 million m², of which 60% is classified as grade A. One of the biggest projects completed in 2014 was the Westend Gate building offering 35,000 m² of office space. By the end of 2015, the first phase of Twin City should be finalised, adding further 16,000 m² to the market.
Prime rents are unchanged even with better occupancy
Prime rents in Bratislava were unchanged at €186/m²/year despite increase in letting activity. In secondary locations the average rents range from €120 to €156/m²/year. In 2015 effective rents will be lower, as landlords grant attractive incentive packages. The vacancy rate decreased slightly to 13.8%. It is expected to increase in 2015 with release of second hand offices resulting from relocations to the newly supplied modern offices.
Investment activity at its strongest since 2006
Activity in the Slovak investment market is at its strongest since 2006. Investors targeted the capital, focusing on prime properties, searching for a top quality building with good location, long lease terms and strong tenant covenant. Offices and mixed-use buildings were the leading sectors whereas outside the Bratislava investment market was driven by retail and industrial properties. The largest investment transaction in 2014 in Slovakia was the acquisition of the Eurovea retail and office property in Bratislava. The prime initial yield is currently at 7.15%, having slightly dropped since the end of 2013. The initial yield ranged between 8.50 and 9.00% in well-leased secondary properties in good locations.