of Budapest office space lacks tenants
The first quarter of 2011 brought no notable drop in vacancy on the Budapest office market, leaving the total largely level with data from the last quarter of 2010. According to the latest figures released by the Budapest Research Forum (BRF), take-up in Q1 came to 77,517 square meters (sqm), but this included several relocations and lease renewals, thereby contributing little to diminishing overall unoccupied stock.
Budapest’s office market saw a vacancy figure of 21% in the quarter, which is higher than at the end of last year but still below the 21.6% peak recorded in the third quarter of 2010. North Buda and the Váci corridor remain the regions with the lowest vacancy rates, of 14.86% and 15.36%, respectively.
At the end of March, BRF recorded an aggregate of 3,069,064 square meters of office stock in Budapest, a figure that includes owner-occupied and speculative buildings. In a breakdown by type, 2,541,509 sqm of the total are A and B grade modern speculative office buildings and 527,555 sqm are owner occupied space. The vacancy rate of the speculative stock stood at 25.34 %.
The largest transaction in the quarter observed by BRF was a confidential lease renewal of 10,500 sqm. Renewals in general played a highly important role overall, covering 37% of take-up. The period also brought a surge in new leases, which made up 44% of take-up. However, BRF pointed out that these transactions mainly involved companies relocating within Budapest, so the vacancy total did not decrease substantially.
Of the few actual new leases, the biggest on record was Magyar Takarékszövetkezeti Bank renting out 675 sqm in the Margit Ház office building. During the period, 147 lease agreements were concluded with an average transaction size of 530 sqm, 27% lower than the first quarter of 2010.
This article appeared in the BBJ's Office Market special report on April 22, 2011.