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Budapest Office Market Report - 2016 Q1

Tuesday, 24 May 2016 09:15
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The Budapest Research Forum (hereinafter the BRF) hereby reports the Q1 2016 office market analysis.
 
One new specilative office building was delivered to the market in the first quarter of 2016. The handover of Váci Greens B has further increased the modern office stock by 25.600 sq m which now extends to 3.295.150 sq m. The total modern office stock comprises 2.630.570 sq m of category 'A' and 'B' speculative, and 664.580 sq m of owner occupied buildings.
 
As the result of our annual stock revision, 4 buildings were excluded from the modern stock as they no longer meet the category 'A' or 'B' standards, and a further 46 buildings GLA's were amanded due to re-measurements taken place over the course of 2015.
 
The office  vacancy rate declined by 4.4 pps y-o-y and by 0.8 pps q-o-q, currently standing at 11,3%. The lowest vacancy rate (5,9%) was measured in the South Buda submarket, whilst the Periphery region continues to suffer from the highest vacancy rate on the market standing at 29,8%.
 
 Demand in Q1 2016 was 30% higher than the 5 year average of the first quarter' lettings, comprising 84.410 sq m, which is half of the record level registered in Q4 2015.
 
According to the BRF, 212 lease agreements were signed in Q1 2016, with an average deal size of 398 sq m. The largest deals of the quarter was the GE expansion in the Váci Greens office building. This was followed by MSD's renewal in the Millennium Towers III for 2.498 sq m. The largest new transaction was in Átrium Park, extending to over 1.800 sq m.
 
The share of renewals and new deals shifted in Q1 2016 and new deals were the major driver of the market demand with 47% market share. Renewals accounted for 34%. Only 18% of the total leasing activity was expansion based. No Owner-occupied transactions was registered in the quarter.
 
At submarket level, the Central Pest and the Vávi Corridor had the highest leasing actibvity, both representing more than 20% of the market share.
 
Net absorption totalled 29.301 sq m in Q1 2016, of which Váci Corridor alone accounted for 14.109 sq m.
Last modified on Tuesday, 24 May 2016 09:44