Photo: Saša Nikolić Belgrade lacks at least twice as many square meters of office space as it currently has, and the vacancy rate is extremely low. These are the realities that companies looking for suitable workspace for their employees—and, of course, rental agents, who provide the most assistance—find the most difficult to accept. And the needs are increasing given the large influx of foreign companies as well as the increasingly rapid development of the IT sector. We asked Nebojša Ivić, team leader at Colliers Serbia's lease section, what the current situation is in the office space market in Belgrade and how much of a challenge it is to find space for a client when the supply is limited.
Even though Belgrade's office space market expanded by about 120,000 square meters last year, the high demand did not significantly decline. What is the cause of this imbalance, which has long existed in Belgrade?
Numerous foreign companies are setting up offices in Belgrade, looking also for production and logistics space. Geopolitically, Belgrade is very favorable for development. The majority of the Russian companies that have recently arrived in Belgrade are in the IT industry. Both domestic and international IT companies are expanding significantly. Their development is rapid and requires constant employment, so the need for office premises is increasing. These are companies that are looking for office space exclusively in business centers. The most frequent inquiries are from companies with up to 10 employees. Individuals have recognized this trend and used it to adapt living spaces for those who want office space.
Given the insufficient supply and high demand and the increasing influx of foreign companies, how much of a challenge is it in practice to find a suitable work space for the client?
Domestic clients are aware of the situation and plan their relocation up to a year in advance. With foreign clients, it's a little more difficult because they need space much faster, and that's where the challenge arises. It is interesting that, in the last year, the demand for office premises in the old part of the city has been increasing. Also, more and more companies are adapting to the needs of employees. For example, if a company employs more workers who live in the center, they will look for space there. One of the examples of modern office space for such "urban employers" is the Artklasa office building, which is located in Dorćol, near Silosi, within the Belgrade Port complex. Created by the renovation of the administration building of the former Žitomlin factory, Artklasa, on 14,850 square meters, offers the most modern office space with a sports center, cultural facilities, a kindergarten, 250 parking spaces... When creating this project, everything was thought of. The concept of open space, high ceilings, and a phenomenal view of the river create an unusual ambience.
How much has the high demand, as well as the increasing number of ultra-modern office buildings in exclusive locations, affected rental prices?
Office space rental prices did not experience the same increase that happened with the rental prices of residential properties. On the contrary, they remained at the same level. What will change are the service costs. The price of energy has not really risen yet, and that is expected. Office space rental prices range from 12 to 16 euros per square meter, and service costs are from 3 to 4.5 euros per square meter and usually do not include the biggest consumers: electricity, cooling, and heating. A big problem is the lack of parking spaces, especially in the city center.
Numerous projects for the construction of new office buildings and the reconstruction of old office buildings promise hundreds of thousands of square meters of new office space in Belgrade in the coming years. Is the interest so great that the largest percentage of these offices have already been rented out?
Reconstruction of old office buildings is something that tenants are very interested in. Currently, two large old office buildings are being reconstructed. One is the BIGZ building near the Fair, and the other is the already mentioned Artklasa in the Belgrade Port. What I notice as a positive trend is that new buildings are appearing in some new locations in the old part of the city, such as the construction of the East Side office complex in Zvezdara, which somehow contributes to the decentralization of New Belgrade as a city business zone. The AFI City Zmaj business center is being built in New Belgrade, while the area behind Airport City, together with the Alco Business Center, is being turned into a serious business center. However, all this only partially facilitates the search for office space because the offices in the buildings under construction are mostly rented out in advance, which indicates a huge demand.
How do you anticipate further trends in the office space market in Belgrade?
Everything indicates that office space rental prices will not increase in the coming period, but the problem will be in the service costs. If there is a change in energy prices, I am sure that the way of calculating service costs will also change: the prices will no longer be fixed per square meter but will be calculated per consumption. In some office buildings, this calculation method is already applied.
Considering the heavy traffic in Belgrade and the large crowds that take a lot of time for employees to commute, the construction of office buildings in other parts of the city, aside from New Belgrade, would significantly ease this situation. I have already mentioned the East Side project, which, with its 3,150 square meters in the heart of Zvezdara, will certainly ease this situation for the people who live there and who will soon be able to work in the business zone close to home.
Startup companies are on the rise. They most often opt for a coworking office space, and that is one of the reasons that all capacities of that type are mostly filled. For the development of coworking, it is necessary to expand the capacities in all parts of the city, in the form of smaller centers, in order to make them more accessible to tenants.
By: Jovana Nikolić
Photo: Saša Nikolić
