The total supply of modern office stock in Zagreb at the end of Q3 2020 amounted to app. 1.5 million sqm, including Class A and Class B office space. Speculative office stock totals approx. 1,050,000 sqm, i.e. over 75% of the total modern office supply in Zagreb.

There were no new completions in Q3 2020, however, the construction works on the City Island project in Buzin, currently, the largest commercial project in Zagreb, have commenced. The project will be developed in five phases and the first phase should deliver 15,000 sqm of GLA of office space only.

In terms of demand, the office market was very active in the previous period, partially compensating for the slow market activity in the second quarter of 2020. The total take-up in Q3 2020 amounted to 21,400 sqm which was mainly driven by tenant relocations and new leases, with tenants dominantly coming from the high-tech sector and the IT industry. At the end of Q3 2020, the total year-to-date take-up volume exceeded 36,000 sqm. Such a trend has been constant over the recent period as companies continue to migrate to more flexible and modern office schemes.

One of the largest investment transactions in the office market segment, the acquisition of Zagrebtower (25,900 sqm GLA) by S Immo AG, was also recorded in Q3 2020. Prime yields for modern office space vary between 7.50 – 7.75%.

The asking rental values of Class A office buildings vary between € 13-15/sqm/month, while the asking rents of Class B stock amount to around €10-12/sqm/month.

After a marginal increase in the vacancy rate in Q2 2020, the vacancy rate continued to increase and at the end of Q3 2020 reached the level of 4.17%.