Budapest Research Forum (BRF, of which Eston International is a member) reports its freshest office market report on the first quarter of 2012.
The total Budapest office stock (including owner-occupied and speculative buildings) reached 3,175,807 sq m in the first quarter of 2012. BRF registered only one new office handover (‘IQ Offices’) in Central Pest submarket; with this, the total modern office stock includes 2,622,224 sq m of modern ‘A’- and ‘B’-category speculative office buildings and 553,583 sq m owner-occupied buildings.
Having reviewed the overall stock it transpires that 18 buildings increased in size due to a change in the measurement system employed, which increased the stock by 14,565 sq m. Furthermore, BRF re-classified 13,500 sq m of office area into ‘speculative’ category.
The total volume of demand extended to 53,249 sq m in Q1, which is almost one-third less than in the first quarter of last year. In contrast with the record levels of 2011, the leasing volume of Q1 2012 reverted to the average levels in line with the preceding years, when take-up accounted for circa 50,000-60,000 square meters per quarter.
The office vacancy rate now stands at 20.4%, which is 1.2 percentage points higher than in the previous quarter. This increase is due to the negative net absorption value, stock revisions and the vacated former K&H Bank HQ in the CBD. The lowest vacancy rate (16.2%) was measured in the Central Pest submarket, whilst the highest vacancy level is still seen in Periphery region (33.1%).
BRF registered 128 signed lease agreements in Q1 2012, with an average deal size of 416 sq m. This size is 21.5% lower than in Q1 2011. There were 9 contracts in Q1 with volumes greater than 1000 sq m each, covering 4 lease extensions, 3 new leases and 2 pre-leases. The largest transaction of the first quarter was Vodafone’s lease extension for its Shared Service Centre with a volume of above 8,000 sq m in the Aréna Corner office building.
The major new lease transactions comprised: National Innovation Office (Nemzeti Innovációs Hivatal) on 2,400 sq m in Krausz Palace and DBH’s lease in Greenpoint 7 for 1,200 sq m. Two new pre-lease agreements have been concluded, bringing a total of 8,000 sq m lease in Skanska’s ‘Green House’ in Central Pest submarket. The share of new lease agreements stood at the same level as in the previous quarter at 40.5%, while lease renewals reached 38.7% of the total demand.