Hungary Demand down 59 pct for Budapest offices
Office & mixed-use developmentAgora Hub (34,500 sqm) and Nordic Light Trio (13,285 sqm) were handed over in the Váci Corridor submarket. The refurbishment of Gizella Loft (8,500 sqm) in Non-Central Pest and Irányi Palace (3,500 sqm) in the CBD was also completed in the third quarter. An office building (2,300 sqm) purchased by an end-user was moved to the owner-occupied category. In addition, an office scheme in Central Buda (1,800 sqm) was deleted from the modern speculative stock, and another in Central Pest (8,700 sqm) was temporarily moved to the pipeline schemes.
The total modern office stock currently adds up to 3,856,700 sqm, consisting of 3,242,000 sqm category ‘A’ and ‘B’ speculative office space as well as 614,700 sqm owner-occupied office space.
The office vacancy rate has increased to 8.1 pct, representing an increase of 0.8 p.p. quarter-on-quarter and a growth of 2.2 pp. year-on-year. The lowest vacancy rate of 3.5 pct was measured in the North Buda submarket, whereas the Periphery still has the highest vacancy rate of 33 pct.
The net absorption in the third quarter amounted to 6,400 sqm, while the total demand reached 79,300 sqm, representing a 59 pct decrease year-on-year. Out of the total leasing activity, renewals still represented the largest share. In Q3, 36 pct of the total demand was made up of lease renewals. New leases accounted for 26 pct, expansions for 17 pct, while pre-leases made up 18 pct of the total demand. Owner occupations took up 3 pct of the total demand.
The strongest occupational activity was recorded in the South Buda submarket, attracting 27 pct of the total demand. Váci corridor submarket ranked second in this respect attracting 25 pct of the total demand and was followed by Non-Central Pest submarket with 16 pct of the total demand.
According to the BRF, 106 lease agreements were concluded in the third quarter and the number of signed transactions dropped by 25 pct compared to the same quarter of 2019. The average deal size amounted to 749 sqm. BRF registered nine transactions of more than 2,000 sqm of office space: one pre-lease, four expansions, three renewals, one new lease and one owner-occupation deal.
The largest transaction was a pre-lease agreement concluded for 14,100 sqm signed by Vodafone in Budapest One P2 in the South Buda submarket. The largest renewal was a nearly 4,800 sqm deal in Non-Central Pest, and the largest expansion was concluded for 2,600 sqm in Infopark B.
The Q3 2020 office market statistics further reflected the economic changes triggered by the Covid-19 pandemic. Demand is lagging behing the levels of previous years with a reduced number of transactions.
The Budapest Research Forum comprises CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary.
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