The Budapest Research Forum hereby reports the Q3 2015 office market analysis
October 15, 2015
The Budapest Research Forum (BRF, which comprises of: CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary) hereby reports the Q3 2015 office market analysis. Two schemes were delivered to the market in the third quarter of 2015 adding a total of 27,800 sq m to the modern office stock. This includes the refurbishment of Erzsébet Irodaház A and the delivery of owner-occupied Bosch HQ second phase.
The modern office stock is now of 2,615,600 sq m speculative- and 662,300 sq m owner-occupied office space. The office vacancy rate continued to decline further bottoming at 13.5% at the end of Q3 2015. This is the lowest figure on record in the last seven years: year-on-year decline represented a remarkable 3.4 pps, whilst quarter-on-quarter change amounted for -0.7 pps.
On submarket level, the lowest vacancy rate was again measured in South Buda with only 7.9%; whilst the highest figure was registered in the Periphery submarket at 29.6%.
Demand in Q3 2015 reached 99,600 sq m of transacted office space, which is in line with level of the 5-year average of Q3 lettings, albeit circa half of the all-time record volume registered in the previous quarter.
Renewals and new deals were moving the market in Q3 2015. The volume of net take-up (total leasing activity excluding renewals) match a share of 46% within the total leasing activity, which is significantly lower than the level registered in the previous quarter. This is due to the fact that only one small pre-lease agreement was registered in this quarter.
Renewals accounted for 54%; new deals gave 31% of the total leasing activity, whilst expansions accounted for 15%. No owner-occupied transaction was registered.
Due to the two large pre-lease agreements, take-up (total leasing activity minus renewals) was particularly strong in Non Central Pest (63,530 sq m) and Central Pest (39,100 sq m) submarkets.
The largest new deal was recorded in Central Udvar A office building, accommodating UNICEF on 6,200 sq m. SAP made the largest renewal in Graphisoft Park on 10,000 sq m. Altogether 37 transactions was concluded above 1,000 sq m, including 19 renewals, 13 new deals, three expansions and two pre-leases.
180 leasing transactions with an average deal size of 553 sq m were registered by the Budapest Research Forum in Q3 2015, out of which only four deals exceeded 5,000 sq m of GLA. The quarter’s largest transactions were lease renewals: 13,400 sq m was signed in the Millennium Towers and 7,300 sq m was signed in the Office Garden. The largest expansion took place in the Millennium Towers on 3,400 sq m. The most active submarkets were South Buda, Central Pest and the Váci Corridor which together gave 72% of total leasing activity in Budapest.
Net absorption totalled 47,600 sq m and circa 60% of this volume was registered in the Non-Central Pest submarket alone, backed by the handover of two fully occupied office buildings.
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