The Office Market in Budapest is Heading to New Heights

In the Budapest office market, the vacancy rate is only 7.1 percent. There is a demand for nearly 80,000 square meters in the first quarter of 2019, which is 12 percent less than a year ago. The stock may grow in the coming quarters despite the fact that no new office has been handed over in the first three months, according to BRF's first quarterly office market report in 2019.

The Komplex Irodaház and previously privately owned Siemens HQ were included in the speculative stock in the first quarter of 2019, although no office hand overs took place during this period. The second one was a sale-and-leaseback transaction. The total spread of modern office buildings in Budapest is currently 3 627 500 square meters. Including 3 017 930 square meters of "A" and "B" modern speculative office space, and 609,570 square meters of privately owned office.

The vacancy rate fell by 0.2 percentage points, down to 7.1 percent. This is one of the lowest values measured in Budapest so far. The highest vacancy rate, which was 37.4 percent, appeared in the agglomeration, while the lowest was in the non-central Pest sub-market. Net absorption in the first quarter amounted to 19,940 square meters.

Gross demand was 12.2 percent lower than a year ago, resulting in 79,980 square meters in the first quarter of 2019. Within total demand, new contracts showed the highest percentage of rental value at 45 percent. Subsequently, the contract extensions were 36 percent. Enlargements accounted for a total of 15 percent, while pre-lease agreements accounted for 4 percent.

As it was observed earlier, the strongest tenant activity was in the Váci Road office corridor, which is 35 percent of the total value. Subsequently, the sub-market of the Pest Center follows with 16.5 percent and the South Buda sub-market with 13.5 percent.

A total of 153 rental contracts were registered by BRF during the quarter, with an average size of 523 square meters. 21 contracts were concluded over an area of over 1000 square meters. Within these, there were 8 new lease agreements, 9 contract extensions, 1 lease agreement and 3 extensions.

Two of the three most significant transactions of the quarter were signed at the Váci Road office corridor. One of the biggest was an extension of 4800 square meters in the River Estates office building. The largest new contract was signed in the White House office building with 3560 square meters. The largest pre-lease contract was signed for the development of the Nordic Light 3 office building on 1560 square meters. The largest of the expansions occurred in the Buda Square office building, with 2,500 square meters.

Source:

Portfolio.hu