The Budapest Research Forum (BRF, which comprises of: CBRE, Colliers International, Cushman & Wakefield, DTZ, Eston International, Jones Lang LaSalle and Robertson Hungary) hereby reports the Q4 2013 office market analysis.
No new office buildings were delivered to the market in the last quarter of 2013, thus the total Budapest office stock (including owner-occupied and speculative buildings) remained unchanged at 3,172,400 sq m of office space. The annual supply was 30,100 sq m, 30% higher than in 2012. In 2014 further improvement is expected as several buildings are planned to be handed over with a total area of around 67,000 sq m.
Vacancy rate remained broadly stable at 18.4% in Q4, only 0.2 percentage points lower than in Q3. On an annual level however we observe a positive trend with a 2.6 percentage point decrease compared to the previous year. The overall picture did not change significantly at submarket level either. South Buda and Central Pest are still the best performing markets with 13.2% and 14.3% vacancy rates, respectively. The largest positive change was registered in the CBD where the market indicator dropped back by 7.6 percentage point year-on-year now standing at 17%.
Although only modest net absorption was recorded during the last quarter of 2013, the annual volume of the indicator reached 47,500 sq m, which indicates a considerable improvement on 2012, when it dropped to negative territory.
Total leasing activity was outstandingly high in Q4, amounting to 153,500 sq m. However, 77% of this volume were lease renewals which was boosted by a number of large transactions above 10,000 sq m (i.e.: MÁV, Budapest Bank and British Petrol).
On a less positive note, the largest new deal did not even reach the 1,000 sq m threshold in Q4. The largest deal in take-up was an expansion (2,600 sq m) signed by an international company who expanded their shared service centre in the new Váci Greens office building.
Annual demand excluding renewals totalled 190,500 sq m, 9 % higher than in the previous year. The volume of renewals also overtook the 2012 figure by 7%.
According to BRF, 215 lease agreements were signed in Q4 2013, with an average deal size of 714 sq m. This indicates a significant increase compared to the Q3 figures, mainly due to the large renewals which occurred during the quarter.
On annual level, the total number of transactions reached 745 with an average size of 534 sq m.
Váci Corridor has remained the most popular submarket for tenants. The submarket had 25% share in total take-up and 29% in total leasing activity.
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