Cushman : Minimum wage increases have been having highest impact on office occupancy costs

The occupancy costs in Bucharest have risen by around 10% in the past two years, primarily due to increased operational costs and rent indexations amidst high inflation. The main factors influencing these operational costs include the rise in minimum wage and the return of employees to offices. Smaller office buildings have seen a more significant increase compared to larger ones, which benefit from economies of scale. Operational costs, which are added to the rent, consist of property tax, technical maintenance, insurance, cleaning services, security, internet services, and property management. Property taxes often account for up to 50% of the total operating expenses. The increase in waste disposal, driven by higher building occupancy rates, has also contributed to the rise in operational costs. To manage these costs effectively, the Cushman & Wakefield Echinox Asset Services team has implemented measures such as monitoring and controlling utilities consumption, ensuring efficient waste collection, and regularly assessing supplier performance. Simple methods like tracking weather forecasts, public holidays, and employee presence in the office can also help optimize costs. By adhering to preventative maintenance schedules, long-term cost savings can be achieved by reducing repair expenses, avoiding premature equipment replacement, and minimizing tenant disruption. The company manages 14 real estate projects with a total area of over 450,000 sq. m and a market value nearing €500 million nationwide, serving 150 tenants from various industries. In Bucharest, the company oversees several iconic office buildings, with operational budgets exceeding €9.5 million. In summary, the increase in occupancy costs in Bucharest is driven by factors such as higher minimum wage, increased office occupancy rates, and inflation. Property managers face the challenge of maintaining competitive costs while meeting tenants needs and ensuring quality standards. The Cushman & Wakefield Echinox Asset Services team has implemented various measures to optimize costs and support tenants ESG objectives.

Source: business-review.eu
Published on 2024-10-02

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