The office estate market has been revitalised

The office estate market in Budapest has maintained its level of progress for 2015, which started in 2014, and has set a new record of rental rate, surpassing the earlier milestone – as reported by Cushman & Wakefield.

2015 saw the ratification of contracts regarding the lease of office spaces nearly as vast as 538 000 m2 in total – which indicates a 16% growth compared to 2014 figures. The increased demands and the lack of newly opened office blocks have decreased the vacancy rate, which stood at at 12.1% at the end of the year, a number last measured before the recession. This means that Budapest’s office market has a lower vacancy than that of Prague or Warsaw, which is a radical turn compared to the situation of 4 years before.

“There’s no doubt that the rental rates of 2015 has exceeded every expectation. Practically, there were no newly inaugurated office spaces – if there was, it immediately got utilised by the market. A great example is Váci Greens’ Building C of 18 500 m2, which had a 100% rental rate achieved exclusively by pre-lease agreements” – explained David M. Johnston, Cushman & Wakefield’s head of office leasing department in Budapest.

The specialist expects the momentum to last into 2016 as well, since the demands are continuously strong, which are boosted further by the limited number of new office spaces opened for lease. This makes demands to surpass supply still, and also enables the vacancy rates to drop to a yet smaller level. As the market’s movements seem to favour lessors even more, the different types of rental stimuli are going to be limited to the best areas, making rental fees higher. “We’re expecting a rise in fees in the most popular sub-markets (on the Váci Corridoor, for instance), a decrease in the oversupply currently present in the outskirts of the city, while several developers will be able to take the opportunity of starting speculative office developments into serious consideration” – added Mr. Johnston.

A light at the end of the tunnel – the office market rises again

Something positive has started on the Hungarian office market, which is indicated by the continuously decreasing vacancy rate and the growing demands. According to some opinions, the recent boom in office leases is a safe sign of Europe finally being able to recover from the economic crisis. Others explain these tendencies with the resurgence of previously restricted or neglected demands.

(Source: http://www.piacesprofit.hu/gazdasag/felporgott-az-irodapiac/)