The total Budapest office stock (including owner-occupied and speculative buildings) did not change and therefore stands at 3,175,807 sq m for the third quarter of 2012. BRF did not register any new office handovers; consequently, the total modern office stock comprises 2,622,224 sq m of speculative office buildings and 553,583 sq m owner-occupied buildings.

The total leasing activity totalled 95,586 sq m, which is nearly identical to the activity seen in Q2 2012, and approximately 16% lower than the level registered in Q3 2011. This results in the first three quarters of the year totalling 244,665 sq m of take-up, which equates to 12% less than the first three quarters of 2011.

The office vacancy rate now stands at 21.5%, which represents a 17 basis points increase compared to the previous quarter. The amount of vacant office space has increased, albeit, at a lower amount. The lowest vacancy rate (16.5%) remains in the Central Pest submarket, whilst the highest vacancy level remains in the Periphery region (33%). Both these submarkets and the Non-Central Pest submarket showed improvement in comparison with the previous quarter, which may give some tentative reason for a more optimistic outlook.

BRF registered 151 lease agreements in Q3 2012, with an average deal size of 636 sq m, which is 17% lower than in Q2 2012.

There were 25 contracts registered with sizes greater than 1,000 sq m each. More precisely these comprised 2 expansions (including renewals), 11 renewals, 8 new lease agreements, and 4 expansions. The largest transactions of the third quarter were renewals: MAG Zrt. extending to 8,600 sq m (including expansion); several transactions in Átrium Park office building, extending to approximately 18,000 sq m which comprised renewals and expansions.

8 new lease agreements were signed for space exceeding 1,000 sq m; the two largest transactions were registered in the IP West office building (software developer company with 2,225 sq m), and in DC Offices.

The share of renewals continued to increase, and now accounts for 51.4% of the total demand. At Green House office building – due to be handed over late December 2012 – two further pre-leases were secured with total 1,066 sq m.

As many tenants renewed, they also expanded within site, which led to the share of expansions extending to 16.4% of total demand, which is nearly 20% increase compared to Q2 2012. he net absorption, similar to the previous quarter, showed negative value.

(Source: BRF)