Budapest office market Q4 2012

Members of the Budapest Research Forum (BRF) include CBRE, Colliers International, Cushman & Wakefield, DTZ, Eston International, Robertson Hungary and Jones Lang LaSalle. The Forum has collected all information and now reports its Q4 2012 office market data.

During the last quarter of 2012 two properties were completed in  the Budapest office market: Green House (17,800 sq m) and the office component of the third phase of Madarász Park (2,800 sq m). Since several prelease agreements were signed in both properties during the year, they were each handed over with nearly 60% occupancy.

With the new completions, the total office stock increased to 3,196,405 sq m; made up of 2,642,822 sq m of ‘A’ and ‘B’ grade modern speculative office accommodation, and 553,583 sq m of owner occupied space.

The annual completion volume reached 22,951 sq m in three properties during the year, which indicates a 74% drop compared to 2011.

With 100,312 sq m transacted office space in the fourth quarter, the leasing activity reached its highest level in 2012. Although this volume is 5% higher than the level registered in the previous quarter, it is still 17% lower than the level registered in Q4 2011. New transactions accounted for 44% of the leasing activity, while expansions and renewals took 4% and 52% respectively.

The two largest transactions of the quarter were renewals; by Raiffeisen Bank in Akadémia Bank Center (11.800 sq m) and Morgan Stanley in Millennium Tower III (11.050 sq m).

The largest new transaction of the quarter, and also of 2012 was signed by Strabag in Infopark D for 7,520 sq m.

BRF registered 123 lease agreements. The average deal size increased by 28% quarter on quarter to 816 sq m.

The annual leasing activity reached 344,977 sq m, which is 13% lower than the 2011 figure. Comparing the last two years’ data the share of new lease agreements remained nearly identical with 37%, while expansions decreased from 16% to 10%. The share of renewals in 2012 amounted to 50%, 11 percentage points higher than in 2011.

The office vacancy rate now stands at 21%, which represents a 50 basis points drop on the previous quarter, but is still 180 basis points higher than a year ago. The lowest rate (16.9%) is recorded in the South Buda submarket, whilst the highest level remains in the Periphery (32.7%).

For the first time in 2012 net absorption showed a positive value with 31.600 sq m in Q4, however the annual volume remained negative with -26.146 sq m.