Budapest, 16th March 2009   

Colliers International Hungary has released its 2009 Office market report. “The Office market will offer excellent opportunities for tenants seeking affordable and modern office space. 2009 is possibly one of the best years ever for a company to relocate, to consolidate its location or expand, primarily because effective rents will decrease and landlords will offer very attractive incentives this year. For a successful leasing, landlords can motivate market players in two ways: either by targeting tenants by aggressive pricing - as for instance the discount offer at the office building in South Buda; or by motivating agencies through more favorable fee packages.” said Miklós Saly, Head of Office Leasing Team.

During 2008, 249 000 sqm of new Class A office space was delivered to the market. As a result, the vacancy rate climbed to 17.9% in this market segment. Another 331 000 sqm will be delivered in 2009, of which 248 000 sqm will be the addition of new Class A space for lease; Colliers expects vacancy to reach possibly as high as 25% by the end of the year depending on the extent of the economic crisis. “With difficult credit conditions and a recession, landlords will be in a weakened negotiation position and will likely make a lot of compromises to ensure that their buildings fill up this year,” Miklós Saly stressed. Colliers noticed that effective rents declined by 0.5 EUR/sqm/month in 2008 already and they are expected to decline further by 1 EUR/sqm/month in 2009, again depending on the extent of the crisis.

In a volatile environment such as today, it is always risky to make predictions. The delivery of some projects may be postponed to 2010, the economy may do better or worse, resulting in a different vacancy rate, but overall, the trends show that the oversupply in the Budapest market can only lead to better pricing for tenants. “To make the best of the situation, it is important to enlist the help of a professional tenant representative. Landlords, even in difficult times, are experienced negotiators. Too often tenants try to negotiate their lease contract alone and they forget about important terms and conditions above and beyond the rent; Colliers International is ready to help companies who intend to renegotiate their lease or move in order to get the best conditions possible,” concluded Miklós Saly.