One new speculative office building was delivered to the market in the second quarter of 2016 extending to 5,700 sq m in the CBD, whereas one office building (3,490 sq m) was excluded from the stock, as it was sold and is expected to change its function in the near future. The total modern office stock is currently 3,297,360 sq m. The total modern office stock comprises 2,632,780 sq m of Category ‘A’ and ‘B’ speculative, and 664,580 sq m of owner occupied buildings.

The office vacancy rate continued to decline further by 3.9 pps year-on-year and 1.0 pps quarter-on-quarter bottoming at 10.3%, the lowest level since the financial crises. The lowest vacancy rate (5.8%) was measured in South Buda submarket, whereas the Periphery region suffered from a 31.2% vacancy rate. The vacancy rate of the Non-Central Pest submarket improved the most by 8.1 pps y-o-y standing at 7.9% at the end of Q2 2016.

Demand in the second quarter of 2016 reached 129,172 sq m of transacted office space, which was 53% higher than in the previous quarter

According to the BRF, 202 lease agreements were signed in Q2 2016, with an average deal size of 639 sq m.
Renewals were the major driver of the market with a share of 51%. This was followed by new deals with a proportion of 37%. Expansions accounted for 8%, whereas pre-leases for 4%. No owner-occupied or BTS transaction was registered in this quarter.

In terms of submarkets, Váci Corridor had the highest leasing activity, as 30.1% of all transactions were signed there. This was followed by Central Pest and Central Buda, with a share of 25.2% and 13.2% within the total leasing activity.

BRF registered altogether 26 transactions above 1,000 sq m, 13 renewals, 11 new deals and 2 pre-leases. 9 of these contracts were signed in Váci Corridor submarket, followed by Central Pest and Central Buda.

The largest pre-lease transaction (2,100 sq m) was registered in Nordic Light, while the biggest new lease agreement was recorded in Haller Gardens, extending over 2,000 sq m.

Net absorption totalled 36,526 sq m in Q2 2016, 24.7% higher than in the previous quarter. Out of this volume, Central Pest accounted for 14,933 sq m.

BRF