C&W expects the office market to further expand in Budapest
The robust occupier market has continued into this year, following last year’s record in terms of take-up with several large pre-lease transactions and a reduction in new supply, which has motivated real estate developers to break ground on series of new projects to be completed in the following years, Cushman&Wakefield said today in a Q2 report.
C&W expects new supply to increase by 65,900 sqm in the second half of 2016. An additional 257,000 sqm of office space is under construction and will be delivered between 2017-2018.
The total pipeline extends to almost 400,000 sqm of office space, the highest levels since the pre-crisis era. In the second quarter of the year, the vacancy rate was reduced again to 10.3%, which is the lowest level since records began in the 1990ʼs, CW said. The Non-Central Buda South submarket continues to enjoy the lowest vacancy rate, at 5.8%.
Demand in the second quarter equated to 129,170 sqm, the 6th highest take-up for a quarter since records began. Váci út continued to dominate the figures, enjoying the highest share of take-up with 38,870 sqm.
Total market size remained at 3.3 million sqm with one scheme delivered (Váci 1), adding some 5,700 sqm of GLA to the stock in CBD, according to C&W. One scheme has been excluded from the stock due to change in use.
Headline rents have started to increase for the best space, with tenant incentives continuing to shorten, which in turn is increasing net effective rents, the report says. The market is now considered to be landlord favorable, according to C&W.
Net absorption totaled 36,530 sqm in Q2 2016 and 65,800 sqm in H1 2016, with Váci Corridor enjoying the highest share with 20,170 sqm.
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