Budapest office stock reaches 3,360,090 sqm
Image by Pixabay
The total modern office stock in Budapest currently adds up to 3,360,090 square meters, consisting of 2,695,510 sqm category ‘A’ and ‘B’ speculative office space, as well as 664,580 sqm owner-occupied space, according to a press statement sent to the Budapest Business Journal by the Budapest Research Forum (BRF).
Only one new office building was delivered to the Budapest office market in the fourth quarter of 2016, covering 25,400 sqm, the BRF said. The fourth office phase of the Corvin Quarter urban development project was developed as a single-tenant built-to-suit scheme for Nokia Networks and goes by the name Nokia Skypark.
Following a slight uptick during the previous quarter, the office vacancy rate has returned to its downward trajectory, decreasing by 1.4 pps quarter-on-quarter to 9.5% - the lowest rate ever on record, according to the BRF. Much like during the preceding quarters, the lowest vacancy rate (3.7%) was measured in the South Buda submarket, while the Periphery still suffers from an overwhelming 34.3% vacancy rate, the BRF added.
Total demand in the fourth quarter of 2016 reached 163,600 sqm, marking a 2% increase year-on-year and an 82% surge on the previous quarter. Renewals counted for a third of the total leasing volume, while the second largest share (30%) was attributable to pre-leases. New transactions accounted for 28%, whereas expansions made up the remaining 9% - overall giving a more balanced split based on deal types. There was no owner occupation registered during the period.
In contrast to the preceding quarters, the strongest occupational activity was recorded in the Central Pest submarket, attracting one third of total demand. The Váci Corridor was the second most popular office destination in the fourth quarter, with 30% of the volume, while South Buda came in third with 10%.
According to the BRF, 230 lease agreements were signed in Q4 2016, with an average deal size of 711 sqm. The BRF registered 31 transactions for at least 1,000 sqm, split into 12 renewals, 10 new deals, 6 pre-leases and 3 expansions.
The largest transaction during the fourth quarter was a pre-lease agreement for the next phase of the Corvin office park; the planned Corvin Technology & Science Park building was approx. 80% pre-let. The second largest deal was a renewal for 13,780 sqm on the Váci Corridor, while the largest new transaction was also signed here for space of 3,740 sqm.
The quarterly net absorption was roughly triple the volume of the previous quarter, totaling 68,790 sqm - the highest such figure in the past five years. Absorption was especially notable in Central Pest (29,810 sqm) and the Váci Corridor (24,825 sqm). Although the remainder of the submarkets registered significantly lower absorption volumes, for the first time since Q3 2015 none dipped into negative territory.
Despite the high demand during the fourth quarter, the 2016 annual leasing volume came in 13% below the record level of 2015. Nevertheless, it has still proven the second most active year since the crisis, the BRF concluded.
The Budapest Research Forum comprises CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.