Low Vacancy Continues in Budapest Office Market
Total supply in the Budapest office market has reached around 3.63 million sqm according to the Budapest Research Forum, consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary.
GTC White House
Of that total figure, a little more than three million sqm is defined as Class “A” with the remainder Class “B” space and almost 610,000 sqm described as owner-occupied space.
There were no new buildings delivered in the first quarter of the year and vacancy has fallen further to close to 7%, one of the lowest levels yet recorded in the market. In line with previous quarters, the lowest vacancy was recorded in non-central Pest at 3.5%, while the periphery continued to suffer from the highest vacancy rate at 37%.
Net absorption in the first quarter amounted to 20,000 sqm while total demand was 80,000 sqm. New leases represented 45% of total leasing activity while renewals represented a 36% share according to the BRF.
The strongest occupational activity was recorded in the Váci Corridor, which attracted over 35% of total demand. This was followed by Central Pest with 17% and South Buda with 14%.
Record Lows
“The Budapest office market delivered strong fundamentals in Q1 as the vacancy rate continued to break record lows. Due to the lack of available units, the market has started absorbing Class ‘B’ office space,” comments Cushman & Wakefield. Prime rents increased to EUR 24.5 per sqm per month in the central business district and EUR 16 in the Váci Corridor.
The largest new deal in the quarter was a 3,500 sqm mid-March letting to IWG Hungary, establishing the first Spaces co-working office in Hungary at the 21,500 sqm GTC White House in Váci út.
Completed in 2018, the complex is now fully leased. This has been achieved within nine months of the official opening according to Bori Gedai, deputy country manager at GTC Hungary. The LEED “Platinum” certified project is built on the site of former elevator factory and includes a 2,000 sqm refurbished stand-alone loft building and 19,500 sqm of new space.
The largest prelease was a 1,550 sqm deal at the 14,000 sqm Nordic Light Trio, also in the Váci Corridor, concluded by Skanska. This forms the third phase of the development.
An estimated 138,000 sqm is expected to be handed over in 2019 according to Cushman & Wakefield.
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