Boom in Budapest Office Development

BOOM IN BUDAPEST OFFICE DEVELOPMENT Hungarian and international developers on the local office market are going ahead with speculative, long-term phased and built-to-suit (BTS) projects; vacancy is low with a limited supply of 5-10,000 contiguous sqm class “A” space to meet demand.

Gary J. Morrell

In reaction to ever more sophisticated tenant demands and specification requirements, developers are delivering more imaginative

developments from the specification and interior and exterior design perspectives.

“If you look at the way the Budapest office market has progressed in

recent years there has been a lot of development and growth, but there has also been a lot of take-up and we see a good balance between requirements for modern space and a diversity of types of new space and

the ability of developers to deliver this,” comments Noah Steinberg, chairman & CEO of Wing.

Total supply in the Budapest office market has reached 3.6 million sqm, around 3 million sqm of which is class “A” and “B” speculative stock according to the Budapest Research Forum (BRF), which collates data compiled by CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary. Total gross demand for 2018 reached 535,000 sqm.

“The city now has circa 482,000 sqm of office space under construction. As a result of the strong demand

in the market, the average vacancy rate in Budapest has fallen to 7.3%. Tenants need to make a quick decision in order to secure quality space,” says Judit Varga, head of office advisory at CBRE Hungary. Despite accelerating speculative development, delivery is expected to be limited to 112,000 sqm of space for the year, around 50% of which is already prelet.

PHASED DEVELOPMENT HB Reavis is due to deliver the 36,000 sqm Agora Tower, the first building scheduled to be completed at the Agora Budapest project in the Váci Corridor. Eventually, the scheme is planned to provide 136,000 sqm of office, retail and

service space, developed on a phased basis according to demand.

Elsewhere, Belgium’s Atenor is developing the 50,000 sqm Váci Greens E and F, the final stages of a phased, speculative office project that will consist of a total of 130,000 sqm of space across six buildings.

In parallel with this, the developer has also undertaken construction of the speculative, phased 72,000 sqm Aréna Business Campus in Váci út. Such large-scale projects reflect the current long-term confidence in the Budapest office market.

Continued on page 45 ► ► ►