Developments Undertaken in Multiple Locations

With a lack of suitable plots in the Central Business District, although there are redevelopment possibilities in earlier generation buildings, competition for sites is becoming more intense and consequently more expensive.

The South Buda sub-market has the highest new supply with 157,000 sqm due to be delivered by 2024, with Central Pest second at 151,000 sqm) and Váci út and its once pre-eminent office corridor having slipped to third with 113,000 sqm, according to Cushman & Wakefield.

In response to tenant demands, office development is targeting urban locations that are better integrated into the wider city. The conventional wisdom is that staff who often work flexible hours prefer to be in places that allow them to utilize local amenities and commute by public transport or bicycle.

The preference is reflected in figures from the Budapest Research Forum (CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary), which puts vacancy in North Buda at a low 5-6% compared to a very high 31% for the periphery.

“The main office hubs of Budapest have not changed; these are still the Váci Business Corridor and the Central Business District: no wonder Academia, being on the riverbank, is considered a trophy asset,” comments Csaba Zeley, managing director of ConvergenCE.

Budapest ONE business park by Futureal.

Considerable Interest

“These may only be joined by new areas supported by great public transportation, such as South Buda. Offices with a great location and [high] quality remain attractive investment options; there is still considerable interest in our market,” he insists.

The pan-European real estate investment manager, Europa Capital, acquired the 12,500 sqm Akadémia Business Center, located on the Pest bank of the Danube in the historical center of Budapest, in partnership with ConvergenCE. The acquisition was completed on behalf of Europa Capital’s latest value-add fund, Europa Fund VI, and the building has been rebranded Academia as part of its renovation and market repositioning.

Budapest has several thriving business districts across the city partly because it has no true, well-defined CBD due to a lack of suitable development plots. A notable exception to these has been Horizon Development projects involving the renovation and redevelopment of classic historical buildings into offices, retail and restaurant spaces, working with its partner DVM group.

Here more than anywhere else, it is seen as highly important to evaluate a project on a community level and not just as a stand-alone commercial project. Sustainable buildings are smart buildings that respond to the needs of the building users, but they must also interconnect with their environment.

At the western edge of the city in District XI, Futureal is developing the 68,000 sqm Budapest One Business Park on a brownfield site at a transport hub at Etele tér adjacent to the Kelenföld railway station and the Metro 4 station. The area, including the newly opened Etele Plaza shopping mall, is seen as a new city quarter by the developers.

Another experienced developer in the Váci Corridor, Skanska, has started developing the 26,000 sqm first phase of its 65,000 sqm H2Offices, consisting of three interconnected buildings on Váci út. CPI, meanwhile, is planning New Age, an office complex at a site close to Árpád híd, and has delivered the 16,000 sqm Balance Hall, part of the 35,000 sqm Balance Office Park on Váci út.

Open Dialogue

“Every location is different, and a new building has to be adapted to its environment; to achieve this, open dialogue is required with the municipality, urban planners, other developers, and representatives of local inhabitants,” says Mátyás Gereben, the country manager of CPI Hungary.

Having completed the phased 85,00 sqm Váci Greens project and successfully sold off the various phases to investors, Belgian-based Atenor is due to deliver two more buildings: RoseVille in Buda and Arena Business Campus B, a phased 85,000 sqm development project at Hungária körút in District VIII, part of the outer boulevard of the city.

As development plots have become increasingly scarce, this boulevard of Budapest has developed into an office hub. Further to the south, where Hungária körút becomes Könyves Kálmán körút, Wing is due to complete the speculative 42,000 sqm Liberty office complex in District IX as part of a business and sporting complex.

For their part, city authorities are looking to attract development that improves the economic environment, provides employment opportunities, and upgrades an area. Developers are reacting to these demands by striving to enhance the architectural design of projects located within urban areas with proximity to residential areas.

Another mixed-use massive scale development is BudaPart by Property Market on a 54-hectare site on the southern Buda bank of the Danube with direct access to the river at Kopaszi Gát, a rare development possibility in an established European capital.

The project includes office, retail, hotel, and residential in addition to large green and park areas and is based on the concept of the development of a new city quarter. This development of infrastructure is seen as transforming the surroundings. As part of the overall development, Hungarian oil and gas company MOL is close to completing its 144-meter high, 28-story, 86,000 sqm MOL Campus HQ building, which will be the first office skyscraper in Budapest.

This article was first published in the Budapest Business Journal print issue of May 6, 2022.