59,785 sqm Of New Office Space Delivered In Budapest In Q3

  • 14 Oct 2020 6:53 AM
  • Budapest Business Journal
59,785 sqm Of New Office Space Delivered In Budapest In Q3
In the third quarter of 2020, 59,785 sqm of new office space was delivered to the Budapest office market in four schemes, according to data compiled by the Budapest Research Forum (BRF).

BRF, which comprises CBRE, Colliers International, Cushman & Wakefield, ESTON International, JLL and Robertson Hungary, notes that the total modern office stock currently adds up to 3,856,750 sqm, consisting of 3,242,000 sqm category "A" and "B" speculative office space, as well as 614,750 sqm owner occupied office space.

The projects that raised the office stock included recent completions Agora Hub (34,500 sqm) and Nordic Light Trio (13,285 sqm) in the Váci Corridor submarket, and the refurbishment of Gizella Loft (8,500 sqm) in Non-Central Pest and Irányi Palace (3,500 sqm) in the CBD.

In addition, office building (2,360 sqm) purchased by an end-user was moved to the owner-occupied category. BRF says that another office scheme in Central Buda (1,850 sqm) was deleted from the modern speculative stock, and another in Central Pest (8,780 sqm) was temporarily moved to the pipeline schemes.

Slight increase in office vacancy rate

The office vacancy rate has increased to 8.1%, representing an increase of 0.8 pp quarter-on-quarter, and a growth of 2.2 pp year-on-year. The lowest vacancy rate of 3.5% was measured in the North Buda submarket whereas the Periphery still has the highest vacancy rate of 33%.

The net absorption in the third quarter amounted to 6,480 sqm. Total demand in the third quarter of 2020 reached 79,350 sqm, representing a 59 % decrease year-on-year.

Out of the total leasing activity, renewals still represented the largest share. In the third quarter of 2020, 36% of the total demand was made up of lease renewals. New leases accounted for 26%, expansions for 17%, while pre-leases made up 18% of the total demand. Owner occupations took up 3% of the total demand.

The strongest occupational activity was recorded in the South Buda submarket, attracting 27% of the total demand. Váci corridor submarket ranked second in this respect attracting 25% of the total demand and was followed by the Non-central Pest submarket with 16% of the total demand.

106 lease agreements concluded in Q3

According to BRF, 106 lease agreements were concluded in tQ3 2020 and the number of signed transactions dropped by 25% compared to the same quarter of 2019. The average deal size amounted to 749 sqm. BRF registered nine transactions concluded on more than 2,000 sqm office space split into one pre-lease, four expansions, three renewals, one new lease, and one owner-occupation deal.

The largest transaction was a pre-lease agreement concluded for 14,140 sqm signed by Vodafone in Budapest One P2 in the South Buda submarket. The largest renewal was a nearly 4,800 sq m deal in Non- Central Pest, and the largest expansion was concluded in the Infopark B on 2,600 sqm of office space.

BRF noted that the Q3 2020 office market statistics further reflected the economic changes triggered by the COVID-19 pandemic. Demand lags behind the trend of previous years and the number of transactions is also down.

 

Photo for illustration purposes only

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Budapest Business Journal

Hungary's largest and oldest source of business and financial news in English. Since 1992 it has presented essential information on Hungarian business life, including international analyses about the country. These days the BBJ newspaper is published every other week, while it releases daily business news online including premium paid content.

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