In per capita terms, it has one of the lowest stocks in the region, and there is, therefore, growth potential. That said, the limited pipeline means companies looking to move to new quality space in 2026 have few choices, comments Valter Kalaus, managing partner of Newmark VLK Hungary.
There are slight signs of a recovery in the office investment market with CA Immo selling its assets following its decision to exit the country. Trophy buildings in good locations will always remain good targets, although office buildings are not the most attractive asset type for investors these days.
The 14.1% overall vacancy rate identified by the Budapest Research Forum (BRF) could be misleading as it spans a range from 27% in the periphery to 7.8% for Central Buda. This makes clear that few companies wish to relocate to the outskirts of the city and that demand in the Váci Corridor, South Buda and Inner Buda is still very strong. The Central Business District is also attracting particular types of tenants.
“Companies that move are obviously looking to relocate to more modern and well-located office buildings,” says Kalaus. “It will be interesting to see what owners will do with the around 200,000 sqm of space that will become available in the near future with the relocation of governmental bodies to new buildings specifically constructed for them,” he notes.
With regard to existing stock, landlords need to look at the feasibility of an office building within its location. If a large tenant relocates from an asset, the owner must consider the feasibility of firstly repositioning it, secondly, repurposing the building for use as a hotel, hostel, private school, private health center or even residential, for example.
Offices are not currently considered the most attractive asset class by investors and financiers. However, usage is increasing with companies looking to bring staff back to the office. IT working practices are for one to two days in the office a week, but there is a labor shortage in the sector and staff, therefore, have a greater ability to dictate their work patterns. Hybrid work in general is here to stay, with the average being three days a week in the office, although a number of companies are looking to step up to four days a week, Kalaus explains.
In terms of requirements, he sees flexibility as key with regard to the length of leases, for example. Location remains essential, with good public transport and car access. Services must include restaurants/cafes, fitness and wellness, bicycle storage facilities and EV chargers.
All market players need to work together with regard to ESG, including financiers, developers, constructors, landlords and office operators. Energy efficiency is crucial to building operations. Offices will need to provide flexibility, sustainability, smart systems and an employee-centric environment.
Landlords are increasingly open to incorporating a serviced office element in their buildings, as these are seen not just as tenants in their own right but also as a service to other tenants, providing temporary yet immediate space solutions, Kalaus concludes.
This article was first published in the Budapest Business Journal print issue of May 16, 2025.
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