Positive Budapest Office Figures Recorded

Office Market

Budapest One by Futureal, the first and second phases of which have been delivered.

Total supply in the Budapest office market has reached 4.7 million sqm as of the third quarter of the year, according to the Budapest Research Forum. The overall vacancy rate for Budapest has increased and now stands at 11%. However, this goes from a low of 4.6% in North Buda to ahigh of 36% in the periphery, according to the analysis.

From the total stock, 3.4 million sqm consists of speculative class “A” and “B” offices, with the remaining 723,000 sqm constituting owner-occupied space, says the BRF, which consists of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary.

Four projects were delivered in Q3, representing 82,000 sqm of space. TriGranit has completed the 21,000 sqm first phase of Millennium Gardens in District XI. The complex is more than 90%, let according to the developer.

Futureal has delivered the 38,000 sqm first and second phases of Budapest One, also in District XI. A further 3,700 sqm has been handed over at Major Udvar in District XII, while Bosch has completed the 17,000 sqm phase two of its owner-occupied offices inNon-Central Pest.

“In the third quarter, the volume of new supply increased significantly compared to the previous quarter; we registered the highest volume since the second quarter of 2020,” the BRF says ofthe figures.

In Prague, a similar-sized city and office market to Budapest, the total modern office stock reached 3.8 million sqm at the end of Q3 2022 with an 8% vacancy rate, according to the Prague Research Forum (CBRE, Colliers, Cushman & Wakefield, JLL, and Knight Frank, supported by associated member Savills).

Although no new projects were delivered in the quarter, around 190,000 sqm of office space was under construction in the Czech capital at the end of the third quarter, with completion scheduled between this year and 2024.  

Budapest Office Demand Up

Total Budapest office demand reached 101,000 sqm in the third quarter, representing a 24% year-on-year increase. Lease renewals represented 33% of the total leasing activity, new leases in existing stock 23%, and preleases in new developments 22%.

Year-to-date take-up levels for Budapest have reached 290,000 sqm, according to Cushman & Wakefield. Further, 52% of the current fourth-quarter pipeline is pre-let.

“This indicates a healthy recovery compared to recent effects of the pandemic,” comments Orsolya Hegedűs, head of advisory and research at Cushman & Wakefield Hungary.  

In the most significant speculative transaction in the third quarter, Atenor has concluded a 16,000 sqm prelease with E.On for the first phase of BakerStreet, due to be completed in the first quarter of 2024. According to Máté Galambos, director of leasing at the developer, the transaction took a year to negotiate.

Cushman & Wakefield has traced a 108,000 sqm pipeline due to be delivered by the year-end; if that is achieved, new supply for the year could reach 300,000 sqm. In the final quarter, Skanska will deliver the first speculative 26,000 sqm phase of its 67,000 sqm H2O complex in the Váci Corridor. BudaPart Downtown will hand over 8,000 sqm of speculative office in addition to hotel space, and F99 is due to deliver a further 14,000 sqm of speculative space. MOL is expected to complete its MOL Campus development at BudaPart, giving Budapest its first proper office skyscraper.

This article was first published in the Budapest Business Journal print issue of November 7, 2022.

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