BRF reports record low office market vacancy rate

Office Market

BRF

According to the latest quarterly report of the Budapest Research Forum (BRF) , the Hungarian capitalʼs office vacancy rate decreased 0.4 percentage points, reaching record lows, with the total modern office stock slowly nearing 3.7 million sqm.

A map of the Budapest submarkets. (Illustration by BRF.)

BRF says that there were two office buildings delivered to the Budapest office market in Q3 2019: Hungária Center (6,920 sqm, in the Non-Central Pest submarket) and the second phase of Advance Tower (7,630 sqm, on the popular Váci Corridor).

Modern office stock currently adds up to 3,668,735 sqm, consisting of 3,064,165 sqm category "A" and "B" speculative office space as well as 604,570 sqm owner occupied space.

In Q3 2019, the office vacancy rate decreased to a record low 5.9%, representing a 0.4 pp reduction compared to Q2. The lowest vacancy rate was measured in the North Buda submarket (2.9%), while the Periphery still suffers from a 34% vacancy rate. 

There is a notable contrast between between Buda and Pest; the vacancy rate has slightly increased in every submarket on the Pest side, while it has slightly decreased in every submarket on the Buda side of the Danube. 

Net absorption in Q3 amounted to 28,095 sqm. Total demand in the quarter  reached 191,235 sqm, representing a 41% growth year-on-year. Renewals accounted for 63% of the total leasing activity, followed by the new leases with 19.8%, while pre-leases represented a 10.4% share. Expansions accounted for 6.7%.

BRF recorded the strongest occupational activity in the Pest Central submarket, attracting 32% of the total demand. It was followed by Váci Corridor and the South Buda submarkets, with a share of 28% and 17% of total demand, respectively.

Increased average

The forum says that a total of 141 lease agreements were signed in the quarter. The average deal size was 1,356 sqm, exceeding the first quarter’s average by 41%. BRF registered 14 transactions larger than 3,000 sqm, made up of just one new lease agreement, three pre-leases in ongoing developments and 10 lease renewals.

Two of the four largest transactions were signed in the Central Pest submarket, one on the Váci Corridor and one in South Buda. The largest transactions of the quarter were renewal agreements, amounting to 63,900 sqm. In spite of previous trends, the proportion of renewals grew.

The largest new deal was concluded in South Buda submarket, with Thyssenkrupp’s development center moving to the South Buda Business Park, occupying 16,000 sqm of office space.

The largest pre-lease agreement was concluded in Gizella Loft office building for 6,000 sqm, while the largest expansion was signed in Center Point office building for 2,230 sqm.

BRF is comprised of CBRE, Colliers International, Cushman & Wakefield, ESTON International, JLL and Robertson Hungary. The forum publishes reports on the Budapest office market on a quarterly basis.

HUPX Joining Serbian, Slovenian Peers in Adex Power

HUPX Joining Serbian, Slovenian Peers in Adex

Moldovan Pensions to be Increased as of April 1 World

Moldovan Pensions to be Increased as of April 1

Schoenherr Names Miklós Klenanc as Head of Local M&A Practic... Appointments

Schoenherr Names Miklós Klenanc as Head of Local M&A Practic...

Hungarian Wine Marketing Agency to Host Summit Drinks

Hungarian Wine Marketing Agency to Host Summit

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.