The Budapest Research Forum (BRF), which comprises CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary, says that the vacancy rate in the Budapest office market is near a record low, with no new office buildings delivered in the first quarter of 2019.
Komplex Offices, with its 11,500 square meters, together with the formerly owner-occupied Siemens HQ after a sale and leaseback transaction, have been added to the speculative stock, BRF notes.
The total modern office stock adds up to 3,627,500 sqm, consisting of 3,017,930 sqm category "A" and "B" speculative office space, as well as some 609,570 sqm of owner-occupied space.
The forum says it has conducted its annual stock revision, excluding two buildings from the speculative stock and further amending the GLAs of 23 buildings due to re-measurements that have taken place over the beginning of 2019.
The office vacancy rate has kept falling to 7.1%, representing a 0.2 percentage-point reduction quarter-on-quarter, one of the lowest rates ever recorded on the Budapest office market. As in preceding quarters, the lowest vacancy rate was measured in the Non-Central Pest submarket (3.5%). Contrastingly, the Periphery continues to suffer from an overwhelming 37.4% vacancy rate.
Net absorption in Q1 amounted to 19,940 sqm. Total demand in the first quarter of 2019 reached 79,980 sqm, representing a 12.2% decrease compared to the same period of the previous year. New leases accounted for 45% of total leasing activity, with renewals representing a 36% share. Expansions accounted for 15%, whereas pre-leases made up the remaining 4%.
Similarly to the last quarter of 2018, the strongest occupational activity was registered in the Váci Corridor submarket, attracting more than 35% of total demand. The Váci Corridor was followed by Central Pest and the South Buda submarkets, with respective shares of 16.7% and 13.7% of total demand.
According to the BRF, 153 lease agreements were signed in Q1 2019, with an average deal size of 523 sqm. The forum registered 21 transactions occupying more than 1,000 sqm office area, split into eight new transactions, nine renewals, one pre-lease agreement, and three expansions.
Two of the three largest transactions were signed in the Váci Corridor submarket, where a 4,800 sqm renewal transaction in the River Estates offices was the largest.
The largest new deal covered 3,560 sqm in the White House office building, while the largest pre-lease happened at Nordic Light 3 at 1,560 sqm. The largest expansion of the quarter was signed in Buda Square at 2,500 sqm.