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Budapest Office Market Report for Q1 2014

Tuesday, 22 April 2014 14:54
The Budapest Research Forum hereby reports its Q1 2014 office market analysis.
The total stock of the Budapest office market, including owner occupied and speculative buildings, reached 3,184,500 sq m at the end of Q1 2014. Speculative stock amounted to 2,558,150 sq m, the owner occupied stock amounted to 626,350 sq m. BRF recorded one new office delivery; the Eiffel Palace (14,500 sq m) was handed over by Horizon Development in the CBD.

BRF made the usual annual revision of the stock, resulting in a negative correction of 2,400 sq m in the speculative stock.

Total leasing activity in Q1 2014 was 57,200 sq m, which is the lowest recorded quarterly figure since Q1 2012. Take up (total leasing activity excluding renewals) amounted to 37,200 sq m.

Vacancy rate remained flat with only a 0.1 percentage point increase on the Q4 2013 figures. The lowest vacancy rate is still recorded in the South Buda submarket (12.2%), whilst the Periphery submarket registered again the highest figure (33.6%).

During Q1 2014, 158 lease agreements were registered with an average transaction size of 362 sq m, 12.8% lower compared to Q1 2013 and almost half of the size which was recorded in the previous quarter. The reason behind this relatively small transaction size was the lack of large transactions (>5,000 sq m) and the high share of small sized deals. 80% of the transactions were signed for less than 500 sq m. 10 transactions were concluded with office space larger than 1,000 sq m; out of them seven were new contracts and expansions.

The largest transaction was a renewal signed by Lufthansa in Infopark E on a total area of 4,500 sq m. The largest new lease was registered in Krisztina Palace on 3,150 sq m. GE further expanded their office space in Váci Greens (2,900 sq m), making the largest expansion in the quarter. In general, new leases took the highest share in total leasing activity (44.1%), followed by lease renewals (35%) and expansions (20.9%).

Similarly to previous quarters, the strongest occupier activity can be recorded in the South Buda and Váci Corridor submarkets; altogether accounting for one third of the total leasing activity. 
Source: BRF