Budapest office market annual demand hits 2015 record in Q4
According to a report by the Budapest Research Forum (BRF), the modern Budapest office stock was extended by a total of 44,265 square meters in Q4 2018, growing the total modern office stock to 3,628,105 sqm, with a 7.3% vacancy rate, and with total annual demand reaching the 2015 record volume.
The 44,265 sqm extension of total Budapest modern office space in the quarter was due to the delivery of four new office buildings: HillSide Offices (21,925 sqm), T贸park Offices (15,355 sqm), Pasar茅ti Irodah谩z (5,870 sqm), and Soci茅t茅 Budapest (1,120 sqm). In addition, two former Magyar Telekom headquarters (30,545 sqm) were transferred from the owner-occupied stock to the speculative stock during the quarter, due to a change in their operation.
Of the 3,628,105 sqm total stock, 3,018,390 sqm consists of category 始A始 and 始B始 speculative office space, while 609,715 sqm serves as owner-occupied space.
The Q4 vacancy rate of 7.3% represents a 90 basis-point increase compared to the previous quarter, but a 20 basis-point reduction year-on-year. The lowest vacancy rate (3.4%) was measured in the Non-Central Pest submarket, followed by V谩ci Corridor (4.3%). At the same time, the Periphery still has a very high vacancy of 38%.
Total demand in Q4 grew 19% year-on-year, standing at 171,490 sqm. Total annual demand came to 535,560 sqm, reaching the record volume registered in 2015. The largest share of total demand in the quarter comprised new lease agreements, taking up 36.2%, while pre-leases accounted for 26.3%, with renewals amounting to 25.3%, and expansions representing 12.2%.
Just as in Q3, the strongest聽occupational activity was recorded in the V谩ci Corridor, attracting 38% of total demand. The V谩ci聽Corridor was followed by North Buda (15%),聽CBD (13%), and South聽Buda (11%).
The BRF says that 202 lease agreements were signed聽in Q4, with an average deal size of 849 sqm. The forum聽registered 34 transactions occupying more than聽1,000 sqm office area, split into eight pre-leases, 10 renewals,聽12 new transactions, and four expansions.
The largest transaction of the quarter was the pre-lease agreement concluded by Raiffeisen for 19,300 sqm in the Agora Tower. The North Buda submarket registered the largest renewal on more than 10,000 sqm. The biggest new lease was registered聽for 6,200 sqm in the White聽House, while the largest expansion was signed for 2,300聽sqm at the V谩ci 33 office building.
Net absorption in Q4 came to聽6,350 sqm, with annual net absorption totaling 228,380聽sqm, which is 79% higher than the volume registered in 2017.
The BRF comprises CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary.
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