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Budapest Office Projects Continue to be Delivered

The Budapest office market continues apace as Atenor has delivered the 20,000 sqm BREEAM “Excellent” accredited Aréna Business Campus A, the first phase of its speculative, 85,000 sqm project in the outer boulevard of Budapest.

Aréna Business Campus by Atenor.

Essentially one of four phases due to be complete in each of the next four years, ground work has already started on a second 14,000 sqm phase.

Elsewhere, CPI and Skanska have officially opened the 16,000 sqm Balance Hall and the 14,000 sqm Nordic Light Trio, both located in the Váci út. All three projects have attracted substantial lettings.  

“Aréna Business Campus A is currently 30% let. We are pushing forward with many ongoing negotiations and therefore we expect to let it completely within a maximum of six months,” says Nikolett Püschl, leasing and development director at Atenor Hungary.

“Ongoing developments proceed, no delays can be expected. For example, the current constructions of all four of Atenor’s office buildings are ongoing as per the original program,” she adds.

The Budapest office market has some of the lowest vacancy levels on record at 7.3%; at the same time supply has been relatively constrained in comparison with past cycles.

The market has a potential pipeline of more than 570,000 sqm with the development of large-scale, phased speculative projects by developers such as Atenor, HB Reavis and CPI and Skanska. Further, Hungarian developers like Horizon Development and Wing are due to deliver major single standing projects.

Growing Stock

Office stock in Budapest now stands at around 3.8 million sqm according to the Budapest Research Forum (made up of CBRE, Cushman & Wakefield, JLL, Colliers International, Eston International and Robertson Hungary). According to Cushman & Wakefield, more than 100,000 sqm of space is due to be delivered in the second half of the year, of which more than 50% is already preleased.

The BREEAM “Very Good” accredited, EUR 31 million Balance Hall office development was completed at the turn of the year and forms part of the 35,000 sqm Balance Office Park; the complex is expected to be close to fully let within a year according to CPI.

“Although our day-to day lives have been transformed by the COVID-19 crisis, we do believe that the domestic office market relies on firm fundamentals that will bring about an upswing in the rental market once the pandemic is over, so we can resume and continue our value creating real estate development thereafter,” Mátyás Gereben, Hungary managing director at CPI commented at the building’s opening.

Skanska EUR 29 million Nordic Light Trio, the third and final part of the WELL and LEED accredited Nordic Light complex, was sold to the South Korean investment trust JR AMC one year before its completion. The complex is close to fully let, with its major tenant being Roche Services (Europe).

Both Skanska and CPI have further developments office projects in the Váci Corridor. Skanska has started construction of a first 26,000 sqm phase of its 65,000 sqm H2Offices, consisting of three interconnected buildings. CPI is developing an office complex at a site close to Árpád Híd. Across the river, Atenor has started construction of its 18,000 sqm BakerStreet project in South Buda; the scheduled the planned hand-over is the second quarter of 2022.