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Budapest Office Market Report - 2017Q3

Wednesday, 25 October 2017 20:00
Split of office demand - 2017Q3 Split of office demand - 2017Q3

The Budapest Research Forum (hereinafter the ‘BRF’) hereby reports its Q3 2017 office market summary. 

Two new office buildings were completed in Q3 2017; Graphisoft Park Start-up building was handed over on 2,500 sq m in North Buda, while Nexon’s 4,000 sq m owner occupied headquarter was handed over on the Váci Corridor submarket. The total Budapest office stock totalled 3,353,235 sq m. The total stock comprises 2,684,655 sq m of Category ‘A’ and ‘B’ speculative, and 668,580 sq m of owner occupied buildings.

Vacancy rate has continued to decrease by 1.0 pps quarter-on-quarter to 7.6%, which is the lowest rate ever on record. The lowest vacancy rate is still recorded on the South Buda submarket (3.3%), whilst the Periphery submarket registered again the highest figure (28.5%). 

Demand in Q3 2017 increased by 67% compared to the previous quarter, comprising 164,985 sq m. Owner occupation deals represented the highest share of the demand in the third quarter with 32.7% share, followed by new deals with 27.6%. Renewals equated 24.8%, while expansions accounted for 6.4%. Share of pre-lease agreements represented 8.3% of the total leasing activity.

According to BRF, 162 deals were closed in Q3 2017, with an average size of 1,018 sq m. In terms of submarkets, South Buda had the highest leasing activity, representing more than 32% of the total demand, followed by Váci Corridor (15%) and Non-Central Pest (13%) submarkets. 

The largest deal of the quarter was an owner occupation agreement in South Buda submarket for 50,000 sq m. The biggest new deal was registered in the CBD, while the largest renewal in Non-Central Pest for 11,130 sq m.

The quarterly net absorption totalled 40,815 sq m in Q3 2017.

Source: BRF