Office market closes robust Q3, momentum may linger into next year
Occupier demand remained robust in the Hungarian office market in the third-quarter of the year, a trend Cushman & Wakefield predicts will continue into next year, according to an analysis sent to the Budapest Business Journal yesterday. Developers have started some speculative new projects this year, but there is very little committed new supply for 2017, therefore C&W expects the office market to remain landlord favorable, with a continuation of rental growth strongly anticipated as the existing supply is eroded further.
New speculative schemes emerged on the market in the third-quarter of the year, prompted by strong occupier activity and low vacancy rate, C&W says in its analysis. A total of 70,900 sqm of office space has been handed over thus far this year, with a total of 350,000 sqm in 18 office buildings scheduled to be delivered by the end of 2018.
The addition of three new office buildings takes the total office market size to 3.33 million sqm. The new buildings are V17 (12,350 sqm), Nordic Light (24,900 sqm) and Buda Loft (2,300 sqm).
The vacancy rate slightly increased from its historic low of 10.3% to 10.9% during the last quarter, C&W data shows. The non-central south Buda submarket experienced the lowest level vacancy rate at 4.7%.
Q3 saw 95,200 sqm of office space leased, slightly down on the preceding quarter. The Váci corridor submarket experienced 47% of the total leasing activity, making it the most active submarket in terms of take-up, according to C&W.
Headline rents have started increasing for the best space, with tenant incentives continuing to shorten, which in turn is increasing net effective rents, C&W said..
Net absorption reached 23,020 sqm in Q3, which represents a 14% decrease as compared to the previous quarter. The highest net absorption was measured in the Váci corridor, at 32,320 sqm, C&W added.
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