Green certification leads to higher rents

Strong demand for sustainable office space is driving up rents in certified buildings. While cities with a high proportion of modern green-certified office buildings have higher rents, they are increasingly attractive to tenants who value energy efficiency and quality amenities.

“Markets like Warsaw and Bucharest have secured their competitiveness thanks to a high proportion of green certifications and modern construction that already meets advanced energy performance standards. If cities with older stock, such as Sofia or Tirana, want to keep up, they will have to modernize intensively,” says Josef Stanko, Director of Market Research at Colliers, adding: “This also applies to Bratislava, Budapest and Prague, which, however, strongly stand out in modernization efforts within the region.”

Rent prices in the monitored cities:

Prague - 15.6 euro/m²

Budapest - ≈17.4 euro/m²

Bratislava - ≈17 euro/m²

Warsaw - ≈17 euro/m²

Bucharest - ≈14.5 euro/m²

Sofia - ≈15 euro/m²

In addition to maturity and sustainability, investors are also attracted by the scale of the market

In addition to the level of green certifications, the scale also adds attractiveness to office markets. In this respect, Warsaw (6.2 million m²), Budapest (4.4 million m²) and Prague (3.9 million m²) are the leaders in the region. Warsaw and Prague are also showing strong activity in the field of modernization. Up to 45% of the office space supply was built in the last seven years. It is precisely such spaces that have higher occupancy rates compared to older buildings, despite the fact that higher rents are paid there. For example, in Warsaw, the vacancy rate is 5% for newer buildings compared to 15% for older ones. In Prague, the situation is currently the opposite and older buildings are more occupied than new ones, but there is a large amount of demand for modern and sustainable buildings on the market. “Unfortunately, due to the weaker office construction, only a part of this demand can currently be satisfied. Some clients have to either reduce their requirements or wait a few more years,” says Josef Stanko.