The Budapest Office Real Estate Market 2007

                                                                                         

The Budapest Research Forum (members: CB Richard Ellis, Colliers International, Cushman & Wakefield, DTZ, and Jones long LaSalle) reports its joint data for the first quarter of 2OO7.

The first quarter of 2OO7 - compared to the previous quarters of 2006 - saw limited market activity in terms of demand for modern office space in Budapest, with a take-up of 59,820 sqm recorded.

This number is 24% lower than last quarter’s figure; however it is 70% higher than a year ago.

During the first three months of the year, the demand remained Concentrated on the Non-Central locations, with almost 65% of the total leased office spaces rented in this submarket. In the first quarter 8 companies decided to sign prelease agreements including Bristol (1,200 sqm) of Millenaris Office Building and Johnson Controll (1,250 sqm) ot Mester Park. 17 contracts were signed for spaces Over l,000 sqm. More than 55% of the tenants chose to rent their Offices and locate their headquarters in Buda, preferring the llth District the most, confirming that this region is the most popular part of the capital in terms of tenant activity followed by l3th district.

The following significant transactions were closed in the first quarter:

T-Online preleased 5,500 sqm in Infopark D , Questor leased More than 2 ,500 sqm in BC 30, Inbev took another 2,300 sqm in Duna Tower, Bayer-Shering renewed its lease in Alkotas Point for 2,000 sqm and Philips expanded its office space (1,300 sqm) of lP West ll.


Throughout Q1, the modern Budapest office market was expanded by 10,508 sqm, which increased the current office stock to 1, 740,110 sqm. Looking at the level of new supply, only three office buildings were delivered to the Budapest market: BJ4 8 Office Building ( 2,158 sqm) in the CBD, Buda City Tower ( 2,850s qm) in the Center of Buda and Riverloft (5 ,500 sqm) on the Vaci ut corridor . The legal dispute between the developer and the owner of Kalvin Center had been settled earlier this year, as a result, the building has been on the market at the end of March.

The vacancy rate was 12.01% at the end of the first quarter of 2007, Which is a slight decrease compared to the end of 2006 and 117 base points lower than one year before.

About the author:
Rony Grynholc is the CEO of ITP group - a private investment company.

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