Office Development Boom Continues Into Summer
Building on a successful first half of the year, established developers are undertaking yet more office projects: a further eight are due to deliver this year with another nine in the pipeline for 2019 according to the Budapest Research Forum (BRF), which comprises CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary.
Promenade Gardens
These follow on from GTC Hungary’s latest Budapest development, the 21,500 sqm GTC White House, Horizon Development’s 22,500 sqm Promenade Gardens, purchased by Erste Open-ended Real Estate Fund, both located in the Váci corridor, and the 13,000 sqm Graphisoft Park South, the latest phase of the research and development park in the outer District III.
Total modern office stock in Budapest currently stands at a little more than 3.5 million sqm, consisting of around 2.8 million sqm “A” and “B” class speculative office space with 664,000 sqm of owner occupied space.
Vacancy up Slightly
The current vacancy rate stands at 7.6%, representing a slight rise from the previous record low recorded in the last quarter. In comparison, total office stock in the equally booming Prague office market stands at circa 3.35 million sqm with a vacancy rate of around 6% according to the Prague Research Forum (CBRE, Colliers International, Cushman & Wakefield, JLL and Frank Knight).
Futureal is due to complete the 12,000 sqm phase of Advance Tower and has started development of a second 7,000 sqm phase in Váci út next year. The company is also due to deliver the 27,000 sqm Corvin Technology & Science Park at the Corvin Promenade project later this year.
As with the previous quarter, the strongest occupational activity was recorded in the Váci Corridor, attracting 36% of demand, followed by South Buda and Central Pest. One of the largest transactions in the second quarter was a 20,400 sqm pre-lease, built-to-suit agreement by Wing for the Univerzum Office Building in South Buda. The company is also due to deliver the 57,000 sqm, built-to-suit, Magyar Telekom headquarters in District IX in the fourth quarter and has an option on a plot adjacent to the complex. Citibank Europe is also to establish its 8,000 sqm headquarters in Promenade Gardens.
Skanska is due to complete the twin-phased, 35,000 sqm Mill Park by the end of the year; the project is letting and negotiations are ongoing for a sale to investors. In the current economic environment, the office development boom looks set to continue as developers are able to source finance, conclude the necessary preleases and leases and sell a development on to investors.
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