Office market report Q3 2013

The total Budapest office stock (including owner-occupied and speculative buildings) reached 3,172,400 sq m in the third quarter of 2013. New supply for the quarter comprised the completion of the first phase of the new Bosch HQ and the purchase of a smaller office building by a tenant which was subsequently categorised in the owner-occupied stock. The total modern office stock comprises 2,588,059 sq m of modern ‘A’- and ‘B’-category speculative office buildings and 584,341 sq m owner-occupied buildings.

Building name

Size (sq m)

Type

Bosch HQ Phase I

10,000

owner-occupied

Total

10,000

 

 

 

 

 

 

Budapest office vacancy rate now stands at 18.6%, showing a 1.3 percentage point decrease compared to Q2 2013 and a 3.0 percentage point decrease year-on-year. South Buda and Central Pest submarkets managed to keep the lowest vacancy rates with 12% and 14% respectively, while the highest vacancy level remains in the Periphery region with 30%. High positive net absorption also indicates an improvement on the market.

The total volume of demand reached 98,014 sq m, 33% higher compared to Q2 2013 and almost the same level compared to the same period previous year. Take-up totalled 243,691 sq m in the first three quarters of the year, almost the same level as previous year.
Out of this volume, renewals had a share of 20% (19,924 sq m), the lowest level registered in the past 5 years. The volume of new leases was relatively high, and accounted for 48% of the total demand. With 15,091 sq m expansions took 16% share, and 2,470 sq m were pre-let. The Bosch HQ and the small office building transaction comprise a 13% share in the owner occupation section.

BRF registered 192 lease agreements in Q3 2013, with an average deal size of 442 sq m. This size reflects a small decrease compared to the previous quarter. Demand for smaller office space is still very high, 94% of the transactions were signed for a volume of ≤ 500 sq m.

The largest transaction of the quarter was signed in Váci Greens office building for just over 5,000 sq m, and the second largest transaction was MSCI who acquired 3,694 sq m office space at Green House.

Váci Corridor accounted for the highest share of demand with 38%, followed by South Buda with 16%.

 

Summary Table:

Q3 2013

Budapest

Completions (sq m)

10,000

Speculative Stock (sq m)

2,588,259

OO Stock (sq m)

584,341

Total Stock (sq m)

3,172,400

Vacancy (sq m)

588,675

Vacancy Rate (%)

18.6%

Pre-lease (sq m)

2,470

New Lease (sq m)

47,429

Lease expansion (sq m)

15,091

Lease Renewal (sq m)

19,924

Owner occupation (sq m)

13,100

Total Leasing Activity (sq m)

98,014