“There are very few upcoming schemes that are either pre-leased or have been postponed, which is likely to result in a tightening supply of high-quality, Grade ‘A’ office space in the medium term,” the real estate expert comments.

“The low pipeline mirrors broader European trends where developers remain cautious due to hybrid work uncertainty, elevated construction costs, and tighter financing conditions,” he adds.

Kalaus says that greater macro stability, improved financing conditions, and visibly stronger tenant demand are essential to unlock speculative development. Over the mid-term, however, activity is expected to recover gradually as confidence returns.

The city is seen as having strong fundamentals, but attracting new developers depends on regulatory predictability, reducing political and economic risks and access to capital. The relatively concentrated developer pool may limit competition and slow market expansion. That said, the resounding nature of the recent general election result may help accelerate the change.

In terms of development strategy, speculative projects remain challenging under the current economic and financing conditions. Typically, a minimum of 50% in pre-leasing is required to secure funding. The viability of speculative development improves significantly with strong anchor tenants and prime locations.

ESG-compliance a ‘Must’

Successful developments must be in prime, well-connected submarkets with strong public transport access and proximity to amenities, particularly within central and established office corridors. With regard to office interiors and amenities, a successful modern office must deliver ESG-compliant design, flexible layouts, high-quality HVAC systems, and strong amenity packages including wellness, collaboration spaces, and tenant services.

The repositioning of older assets is seen as increasingly viable, especially where the location is strong, as upgrading to ESG standards can unlock value and meet tenant demand. A change of use is being considered in ever more cases.

Advice for tenants seeking Class ‘A,’ ESG-compliant space is to engage early, consider pre-leasing opportunities, and remain flexible on timing and building specifications, due to the limited availability of prime ESG-compliant space. Refurbishment and redevelopment projects should also be considered.

A clear two-tier market is emerging, with strong occupier demand focused on modern, ESG-compliant buildings, while older, non-compliant stock is experiencing increasing vacancy and downward pressure on rents.

In the current market environment, tenant representation is becoming increasingly essential, helping occupiers navigate constrained supply, evolving workplace requirements, and heightened ESG expectations. Their role is critical in identifying suitable options early, uncovering hidden opportunities, structuring transactions effectively, and securing optimal commercial terms in a highly competitive prime segment.

“Enhancing regulatory stability, deepening alignment with the EU, and investing in infrastructure, innovation, and talent retention will strengthen Budapest’s competitive positioning. Together, these measures will increase the city’s appeal to international occupiers and investors, supporting sustainable long-term economic growth and reinforcing its role as a leading business hub in the CEE region,” Kalaus concludes.

This article was first published in the Budapest Business Journal print issue of April 24, 2026.