Budapest Office Market Report - Q1 2022
The Budapest Research Forum (BRF) hereby reports its Q1 2022 office market summary.
The total modern office stock currently adds up to 4,053,940 sq m, consisting of 3,387,460 sq m of ‘A’ and ‘B’ category speculative office space as well as 666,480 sq m of owner-occupied space. In the first quarter of 2022, three new office buildings and one owner-occupied refurbishment was delivered to the Budapest office market with the total of 78,350 sq m. In the first quarter, one office building was transferred from the speculative office stock to the owner-occupied stock, representing the reallocation of 2,800 sq m. Two buildings were removed from the modern speculative stock, totaling 4,810 sq m. The size of several buildings was also reviewed and modified in the first quarter.
The office vacancy rate increased to 9.8%, representing a 0.6 pps increase quarter-on-quarter and an increase of 0.8 pps year-on-year. The lowest vacancy was registered in North Buda with a 5.6% vacancy rate, whereas the highest vacancy rate remained in the Periphery submarket (31.0%). Net absorption has recovered to positive territory by the end of the first quarter, amounting to 44,100 sq m. Total demand reached 80,750 sq m in Q1 2022, representing a 7% increase year-on-year. Lease renewals stood for the largest share of total leasing activity with 47%, followed by new leases in the existing stock with 27%, expansions of existing premises reached 15%, while pre-leases in new developments reached 10% of the total demand. The strongest occupational activity was recorded in South Buda, attracting 21% of the total demand. Váci Corridor submarket reached second place with 17%, followed by the Central Pest (16%) and Non-Central Pest (16%) submarkets. North Buda also registered a double-digit share with 11% of the total demand.
According to the BRF, 122 lease agreements were concluded in Q1 2022 and the average deal size amounted to 662 sq m. The BRF registered eight transactions concluded on more than 2,000 sq m office space, including four renewals, one new lease, two pre-lease and one expansion. The largest transaction during the first quarter was a lease renewal for the total of 8,410 sq m in Infopark, while the one new lease agreement was signed for a total of 3,760 sq m in Dorottya Udvar.
The Q1 2022 office market statistics continued to reflect the lingering uncertainties affecting the office market, yet it is reassuring that since the beginning of the pandemic, the first quarter of 2022 has the strongest first quarter leasing activity. The share of net take-up is higher than the share of renewals and with the arrival of a significant amount of new office space to the market, it could further increase.
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