Budapest office space grows to 3.36 mln sqm
The total size of the Budapest office market increased to 3.36 million square meters with delivery of the next phase of the Corvin development over 25,400 sqm in Q4, while a total of 96,300 sqm of office space was delivered in 2016, Cushman & Wakefield said in its Office Market Overview-Budapest issued for March.
As usual, demand peaked in the last quarter, which produced the highest quarterly volumes in 2016, Cushman & Wakefield observes. This helped the yearly take-up reach the level of 466,700 square meters, the second highest on record.
Due to the strong net take-up dominated by pre-lease agreements, net absorption reached 68,800 sqm, which is the highest level since 2012. Yearly net absorption went as high as 147,900 sqm, resulting in further decreasing vacancy rates. At yearʼs end, a new record low vacancy rate was measured at 9.5% in Budapest. The Budapest office market vacancy rate has never before been below 10%.
Seven new office developments were delivered in 2016, totaling up to 95,900 sqm, C&W says. Most of the newly delivered office schemes managed to secure a high share of pre-lease agreements before completion.
Several new developments broke ground speculatively in the second half of 2016, and C&W expects 110,000 sqm of new office supply in Budapest for 2017.
“I expect 2017 to continue as 2016 left off and be another busy year, with several large occupiers on the market looking for long-term office solutions within Budapest,” said David M. Johnston, Partner and Head of Office Agency at C&W.
Prime rent witnessed growth, thanks to the surge in occupier activity and a lack of new stock being released onto the market.
Tenant incentives have continued to decrease for the best space, and C&W expects the level of incentives to shorten further in the near future.
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