Budapest office market set for record-breaking year

The fundamentals of the Budapest office market remained strong in the second quarter, although lower demand increased vacancy rates 1.1pp to 7.3%, the latest BRF market report said. According to Eston’s analysis, there will be about 100,000 sqm of new office space coming to the market this year, most of it concentrated on the Váci corridor.

The pace of office development did not let off in Q2 as more office space was put to market in March-June 2020 (88,000 sqm) than in the entire 2019 (70,500 sqm).

New office space in the second half is expected to be around 100,000 sqm, which means this year could be the highest since 2010 and could surpass 2018’s 230,000 sqm record. The Véci corridor remains the focus of developments, with two of the five office buildings opened in Q2 (Agora Tower and Váci Greens F) adding nearly 60,000 sqm.

Demand for office space in Budapest was 88,000 in Q2, down 46% from a year earlier but 10% higher than in the first quarter. Net absorption remained positive as the amount of office space used grew by 31,000 sqm in Q2.

Vacancy rates rose 1.1pp compared to Q1 to 7.3%.

Vacancy rates stagnated or decreased in nearly all locations, except for Non-Central Pest where it rose from 1.3% to 8% after a new office building opened with low pre-lease rates, while a major tenant moved out of another large building.

Rental fees stagnated in Q2 and are expected to decrease slightly if vacancies keep rising.

Cover photo: Getty Images

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