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While demand for high-quality space remains resilient, new office development has slowed to unprecedented levels, creating tighter supply conditions and reinforcing the market’s growing preference for modern, sustainable buildings, says Colliers.
According to Colliers’ latest CEE-6 Office Market Insights report, total office stock across the six capitals had reached 22.1 million sqm by the end of 2025. However, new office completions fell to just over 200,000 sqm during the year, the lowest annual delivery volume ever recorded in the region.
Looking ahead, only around 300,000 sqm of new office space is expected to be delivered in 2026, significantly below the long-term market averages. Drawing on insights from senior Colliers office market experts across all six capitals, the report identifies a historically constrained development pipeline as one of the key forces reshaping the market.
“Across the region, rising construction costs, stricter financing requirements, and increased caution among developers have significantly reduced speculative development activity. New projects increasingly require substantial pre-leasing commitments before construction can proceed, while mixed-use schemes are becoming the preferred development model,” the report says.
“The CEE office market is not facing a downturn; it is undergoing a structural evolution,” comments Josef Stanko, head of research at Colliers Czech Republic. “The combination of limited new supply, higher development costs and changing tenant expectations is creating a more selective market where quality, sustainability and location are becoming increasingly important differentiators,” he adds.
Average vacancy across the CEE-6 markets declined to approximately 10.5% by the end of 2025, with Prague remaining the region’s tightest office market at less than 6% vacancy. Leasing activity remained healthy, reaching 2.63 million sqm during the year, supported primarily by lease renewals and selective relocations into better-quality premises.
One of the most notable trends identified by the report is the growing scarcity of modern office space. Vacancy rates in high-quality, centrally located buildings are substantially lower than headline market averages, while older assets increasingly struggle to compete. In several cities, large occupiers now face a much smaller pool of suitable options than in previous years.
“The gap between buildings that meet modern occupier expectations and those that do not will continue to widen. The most successful landlords and investors will be those who actively adapt their assets and strategies to a market that increasingly rewards quality, flexibility and long-term sustainability,” adds Jana Vlková, director and head of workplace advisory and office agency at Colliers Czech Republic.
An upturn in the investment market is anticipated by analysts Benjamin Perez-Ellischewitz of Avison Young Hungary and Gábor Zeller of iO Partners Hungary.
“We have already experienced a significant upturn in transactions since the second half of 2025. The trend was confirmed in the first quarter of 2026, with some EUR 300 million transacted, and we expect the 2026 volume to pass the EUR 1 billion level,” comments Perez-Ellischewitz, principal at Avison Young Hungary. “Volumes are expected to be up for the CEE region in 2026 in a range of 10-15%, which would bring the transaction volume to around EUR 12.5-13 billion.”
He argues that the new government needs to deliver on its campaign program and promises, particularly on institutional repair, improved EU relations, and fiscal credibility. What is fundamental at this stage for international investors, especially those from Europe, is to demonstrate that Hungary is back among countries where the rule of law is upheld, he says.
“First quarter transaction volumes marked the most active first quarter since 2007. In light of the recent political shift, we expect the Hungarian real estate to gain further momentum with liquidity set to improve,” says Gábor Zeller, head of capital markets at iO Partners Hungary. The consultancy has recorded EUR 340 mln for the first quarter of the year, broken down to 75% domestic investors and 25% international players.
Perez-Ellischewitz believes that less direct intervention in the market will also help, and that reform or removal of the “plaza stop” law would certainly help retail market activity. Hungary is not currently attractive enough for retailers to enter the market because the plaza stop legislation impedes timely regional development.
He says it will take time for international money to increase its share significantly, and thinks that, for now, this will ensure the local equity share in the investment mix remains high.
“We see interest in all the asset classes currently, with different investors focusing on different asset types and strategies. I do not expect significant moves on yields during the year. While the general trend on the market is positive (given the take-up, interest of investors, improving image of Hungary), this will not be enough to translate into compression before at least six months, and we also need to factor in the general interest rate trends.”
Faedra Group has signed a build-to-own development agreement with one of Hungary’s leading food wholesale and distribution companies. As part of an approximately HUF 6 billion investment, the developer will deliver a logistics facility of more than 15,000 sqm in Budapest’s District XXII, with direct access to the M0 orbital motorway, fully tailored to the client’s operational and technological requirements while meeting high technical and energy-efficiency standards.
“Due to the uncompromising technological requirements of food logistics, the project is being developed under a classic build-to-own (BTO) structure, specifically designed around the future owner’s unique operational specifications,” says Bence Boronkay, founder and managing director of Faedra Group. “The facility will include temperature-controlled frozen storage chambers across multiple cooling zones, complemented by a custom-engineered warehouse structure utilizing 40-meter-span beams, as well as a specialized industrial flooring system developed for extreme low-temperature environments and heavy operational loads,” he notes.
“Throughout the development, Faedra Group is placing a strong emphasis on sustainability and long-term operational efficiency. The building will incorporate advanced energy systems, including integrated photovoltaic solutions and modern heat pump technology, to support cost-efficient, future-proof operation. This milestone transaction clearly demonstrates the strong fundamentals of the build-to-own industrial market in Hungary,” Boronkay adds.
Project preparation is already underway, with earthworks ongoing. 108 Real Estate acted as an intermediary between the parties. The development is scheduled for completion in the first quarter of 2027.
This article was first published in the Budapest Business Journal print issue of June 19, 2026.
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