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There are several developments under construction,
including Novi Zagreb’s Avenue Mall shopping centre
and Erste Bank new headquarters. In the wider
centre, Hypo Centre and Zagreb Tower are due to
be fi nished in early 2007. Among others, block B,
C and D of Almeria tower, Poslovni Centar 2000
and Fingo Project are due to be delivered in 2007.
The refurbishment of ILICA 1 tower in the centre of
Zagreb is also under way, and it is expected to be
fi nished in the second half of 2007.
Demand
In 2006 the supply of good quality offi ce space in the
market was higher than demand for the fi rst time.
Tenants who generally require higher quality and
fl exible space with high density parking are tending
to move from class B/C city-centre buildings to class
A offi ces in the CBD and secondary business zone.
Despite reductions in rents for down-town class B/C
offi ces over 2006, this may mean that older offi ce
buildings will lose some tenants and potentially be
converted back into residential premises over the
next few years.
Recent signifi cant offi ce lettings
Building Size (m²) Tenants
NETCity office
building
Almeria Tower 2,000
3,000
1,000
6,000 VolksBank Leasing,
Vestigo, Croatia Telecom
(Mobile)
Asea Brown Boveri (ABB)
SG (Splitska Banka)
Agrokor
Almeria B 9,500 Siemens
Eurotower 800 Zagreb Stock Exchange
Eurotower 1,600 KPMG
Business Centre
International
1,000 Zagrebačka Županija
Grawe Vukovarska 1,500 Iskon Internet
Grand Centre 2,000 Generali
Grand Centre
Source: King Sturge 2007
2,000 Strabag
Vacancy
In 2005, Zagreb’s class A offi ce vacancy rates was nil
due to limited supply. However, vacancy rates rose
substantially in 2006 and this trend may continue
over the next 12-18 months due to increasing
development activity and is expected to top-out at
around 5-7%.
Vacancy rates of class B offi ce space are expected
to grow more strongly, triggering rental decline
followed by a potential change of use for these
buildings.
www.kingsturge.com 11
Rents
Prime offi ce rents have been slightly falling during
2006 and currently stand around €18/m 2 /month.
Due to a number of new developments that will be
fi nished in the fi rst half of 2007, Zagreb prime rents
are expected to fall slightly. The current range is
from €17 to €18/m 2 /month in the CBD, €13 to €16
/m 2 /month in the wider centre, and €10 to €14/m 2 /
month in out-of-town locations.
City-centre rents are falling more dramatically than
in other areas due to occupiers moving to class A
offi ces in other locations.
Zagreb’s prime rents are slightly lower that in other
Eastern European capitals.
Offi ce rents
Location Range 2006 €/m²/month
CBD – Class A 17 - 18
Wider Centre – Class A 13 - 16
Out of Town 10 - 14
Footnote: rents assume an office of 500m² to 1,000m². Figures quoted are
asking or headline rents where rents are measured on gross internal floor
area with common areas rentalised. Rents exclude occupational costs such as
service charges and incentives.
Source: King Sturge, January 2007
Capital city prime offi ce rents
€/m 2 /month
25
20
15
10
5
0
Belgrade
Warsaw
Source: King Sturge, January 2007
Glossary of terms
Bucharest
Prague
Out of town In town
Zagreb
Budapest
Class A buildings are characterised by prime location, onsite
parking, quality elevators, HVAC (heating, ventilation
and/or cooling) systems, raised floors, concrete and steel
construction and state-of-the-art design and architecture.
Class B buildings are characterised by non-prime location,
old building, and all space has been previously occupied.
Vacancy rate is the percentage rate derived by dividing
the total rentable space on the market, which is physically
vacant as of the market report date (including direct vacant
and sublease space), by the total inventory.