The total Budapest office stock 2012 Q2

The Budapest Research Forum (BRF, which comprises of: CBRE, Colliers International, Cushman & Wakefield, DTZ, Eston International, GVA Robertson and Jones Lang LaSalle) hereby reports its Q2 2012 office market analysis.

The total Budapest office stock (including owner-occupied and speculative buildings) stands at 3,175,807 sq m in the second quarter of 2012. BRF has not registered new office handovers; therefore the total modern office stock includes 2,622,224 sq m of speculative office buildings and 553,583 sq m owner-occupied buildings. The total leasing activity totalled 95,830 sq m, 80% above the Q1 2012 level, and 10% higher than the level registered in Q2 2011.  In the first half of the year the total amount of leasing activity reached 149,079 sq m, 9% less than in the first six months of 2011.

The office vacancy rate now stands at 21.3%, which represents an 80 basis points increase compared to the previous quarter. Despite of the high leasing activity and the stagnant supply the amount of vacant office space has increased in the previous two quarters. Contrary to the market trend the vacancy rate sligthly decreased in the North Buda submarket by 37 basis points. The lowest vacancy rate (16.9%) was measured in the Central Pest submarket, whilst the highest vacancy level is still seen in Periphery region (33.4%).

BRF registered 130 lease agreements in Q2 2012, with an average deal size of 737 sq m. This size is 77% higher than in Q1 2012. There were 22 contracts registered with volumes greater than 1,000 sq m each, covering 11 renewals, 7 new lease agreements and 4 expansions. The largest transactions of the second quarter were also renewals: IT Services’s with a volume of above 16,000 sq m in Infopark ‘B’ and ‘C’ buildings, which contains an expansion, and Citibank’s lease renewal on 9,700 sq m in River Estates.

7 new lease agreements were signed for space exceeding 1,000 sq m; the three largest transactions were registered in the Szépvölgyi Business Park, Millennium Tower II and Mom Park. The share of renewals has increased and reached 51.1% of the demand, which is the highest rate since Q3 2009.  During the renegotiations numerous tenants also opted for an expansion in the office buildings; therefore the share of expansions was 13%, which is more than double of the previous quarter’s rate.

Summary:

Completions (sq m)       0

Speculative Stock (sq m)             2,622,224

OO Stock (sq m)              553,583

Total Stock (sq m)           3,175,807

Vacancy (sq m)675,577

Vacancy Rate (%)            21.3%

Pre-lease (sq m)              507

Lease expansion (sq m)               33,729

New Lease (sq m)           48,967

Lease Renewal (sq m)   12,627

Total Leasing Activity (sq m)       95,830

Net absorption (sq m)  -16,302