lh x cw market report A4_23.03.02 v34 interactive72

DEMAND (SQ M) AND VACANCY RATE (%)

2022’s 13-year-high supply of 267 000 sq m followed a year in which only 44 500 sq m was delivered - and delivery is expected to halve over the coming two years. Supply averaged only 90 000 sq m per annum over the preceding decade meaning that Budapest has a disproportionately large stock of first generation office space.

25%

700 000

Net take-up (sq m)

Renewal (sq m)

Vacancy rate (%)

600 000

20%

500 000

Vacancy rate (%)

15%

400 000

Source: BRF, Cushman & Wakefield Research

300 000

10%

200 000

5%

100 000

0%

0

MEDIAN VACANCY RATE BY BUILDING AGE CATEGORY

2011

2017

2013

2021

2012

2015

2018

2019

2016

2014

2010

2022

2020

2009

18%

In fact, if we look at the last 4 years, we can see that the median vacancy rate for buildings older than 15 years has already reached 16%, while for buildings younger than 15 years the rate is around 7%. The vacancy rate of new stock is a result of the large amount of new supply coming onto the market at any one time, so once this availability can be absorbed by the market, their market advantage becomes

16%

14%

12%

Over 15

10%

8%

10-15

even more apparent. Occupiers are increasingly focusing on stricter ESG criteria, which will certainly accelerate the absorption process. More and more landlords will be forced to upgrade first-generation office buildings to meet new standards and improve their competitiveness as they face rising vacancy rates, falling rents and increasing maintenance costs.

6%

Below 5

4%

2%

5-15

0%

Source: Cushman & Wakefield Research