Rental rates for Class A Zagreb office space, which had faced downward pressure following a massive increase in supply in 2006, have now stabilized at the rate of €14-17 per m². That's according to new Colliers International Croatia research.
Avenue Center in Zagreb.
And after a significant increase in the office vacancy rate in 2006, when the majority of new landmark buildings had less than 50% occupancy, now that number has decreased dramatically and most new buildings have greater than 90% occupancy.
One effect of the big increase in supply in 2006, say Colliers International Croatia in their new office market overview, was that negotiating power shifted from investors to tenants, so that today the office market is tenant-driven.
The latest figures from the third quarter of this year show a takeup of 20,000 m² NLA, a solid amount in a traditionally slow period.
The next few years will see the arrival of the next generation of "smart" office buildings in Zagreb, say Colliers, which will utilize new technologies to reduce energy costs. These will likely force other Class A office buildings to follow their example. The next wave of office expansion is likely to spread beyond the borders of the current Central Business District, with significant new developments recently announced.
Tomislav Perovic, Managing Director of Colliers International Croatia, said, "Absorption has accelerated in 2007 as companies have used the opportunity of favorable terms to relocate. This means that the office market in Zagreb remains dynamic."
Vedrana Likan, General Manager of Colliers International Croatia, added, "We are a major player in the office market, and with recent hires in our office department we are poised to become a market leader in the field."
Philip Bay, Regional Director at Colliers International Southeast Europe, concluded, "I am proud of the high quality market research we produce. It is a valuable tool for clients, media and other real estate professionals, and just another reason why Colliers International Southeast is the leading property consultants in the region."
Click here for the full Croatia Office Overview for the second half of 2007.