RERA

Quarterly office market report Q4 2010

Office market volume

RERA examined a total volume of 2.34 million sq m modern office stock in Q4 2010. As the expansion of stock was lower in comparison with the previous figure, the proportion of class ‘A’ and ‘B’ offices remained almost the same.

71.4% of the office buildings are considered as class ‘A’ building according to their technical standards, of which more than 24% is located in the most popular sub-market, the Váci Corridor.

Second most preferred location is the CBD, where 17% of class ‘A’ office stock has been constructed in the last 10 years.

New deliveries

In Q4 2010 the volume of new deliveries was the lowest since 2006: only 6,280 sq m. Altogether more than 145,000 sq m modern office space was delivered in 2010 which represents a 36% drop in comparison with the 2009 volume (227,689 sq m).

Last quarter’s handovers: due to the prolongation of the permission process, Downtown IX was only delivered in Q4 2010, while the former Nestlé Hungária-headquarter – now renamed Duna Bellview – has been renovated, adding another building to the Inner-Buda region in the fourth quarter.

Vacancy

Based on RERA analysis, the average vacancy rate fell to 25.7% in Q4 2010, which is more than 1 percentage point lower than that of Q3.

Lowest vacancy rate has been measured again on Váci Corridor: 20%, beating former winner North-Buda sub-market (23.2%). Highest vacancy rate was again seen by the Periphery region (41.2%).

Thanks to the continuously growing market activity and the lack of new developments, besides Váci Corridor, the CBD, North-Pest, South-Buda and South-Pest sub-markets vacancy rate improved.

Letting activity

As for the volume of lease contracts, the last quarter showed the year’s highest figure with more than 111,000 sq m (39.6% of the total contract volume concluded in 2010). This indicates solid acceleration from tenant side, thanks to the persistently low rent levels generated by the crisis and to the contract terminations as well.

Highest tenant activity was shown by the South-Buda sub-market with 27.1% of the contract volume. The Váci Corridor also developed in terms of new lease transactions and lease-extensions. Váci Corridor’s letting activity figure increased by almost 23.3% in comparison with the preceding quarter (6,289 sq m).

In Q4 the proportion of new contracts reached 50% of total annual transaction volume, of which nearly 88% represents class ‘A’ offices. Several companies decided to stay and extended or renewed their lease contracts, even with some expansions as well. The quarter’s positive tendency is best demonstrated by the fact that the year’s largest pre-lease contract was concluded in Q4: HBO’s Central & Eastern European regional hub leased 4,517 sq m in Officium (expected handover: Q2 2011).

The largest new lease was for TATA Consultancy Services with 4,400 sq m in Office Garden II.

The 4^th quarter’s biggest lease transaction was for Ericsson Magyarország in Science Park (South-Buda sub-market) that was a combination of lease-extension and lease-expansion.

Net take-up

Net take-up almost doubled in contrast with Q3 reaching nearly 67,000 sq m, which is 59.9% of the total letting activity.

The last quarter showed a 48.6% net take-up in the most popular South-Buda region and 62.2% in the Váci Corridor.

For 2010, total net take-up reached more than 165,000 sq m, which means 58.7% of the total volume of transactions. Since the beginning of the crisis, this was the first time when the market absorbed as much volume as new deliveries produced (145,339 sq m) and even exceeded it by 20,000 sq m.

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Címkék: 2010 Q4, letting activity, vacancy rate