Budapest office market gains momentum, lifted by renewals
Budapest’s office market has certainly been gaining momentum, chiefly due to recently renewed buildings, as new tenants are seen to be targeting the landmark buildings of downtown Budapest for high quality office spaces and in an attempt to expand their businesses, CBRE Hungary said in an analysis sent to the Budapest Business Journal today.
The past five years have seen the renovation of approximately 99,000 sqm of office space in the capital, CBRE notes in its analysis, as owners recognized the increasing demand for sustainability and the importance of energy saving technologies and sustainable property management.
Renovation of older offices seems to be paying off for owners and developers alike. CBRE data suggest that renewed office buildings in the Budapest market have a 10.1% vacancy rate, slightly lower than the market average of 10.3%. The take-up of the renewed spaces saw a peak last year, when 44,000 sqm of office spaces were rented out.
“It has become a trend that, once a large tenant has left office space, the landlord starts to refurbish the office building and these spaces are filled with new tenants soon after. Last year, the vacancy rate declined by 18 basis points,” says Judit Varga MRICS, head of office agency at CBRE Budapest.
Apparently, one the main reasons for renewed office buildings drawing so much attention is high quality spaces, as two-thirds of new tenants are moving up from medium-grade non “A”-class office buildings, CBRE data shows. Another significant factor in lowering the vacancy rate is expanding businesses, as 38% of tenants are renting larger spaces than before, which signals expansion.
East-West Business Center to receive facelift
Spurred by the rising demand, Erste Ingatlan Kft., the owner of the East-West Business Center, is to refurbish its office building. The goals of the renewal include the modernization of the façade, initiating unique engineering solutions, and achieving BREEAM “Very good” certification through the new property management system, CBRE noted.
“As one of the landmark office buildings of Budapest, East-West Business Center at Astoria provides a perfect headquarter in a prime location for new and existing tenants on 21,000 sqm once renovations are finished,” said Varga.
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