The View 9

34

Average Vacancy Rate by Asset Categories

Source: BRF, CBRE Research

In terms of the sectoral background of new demand, H2 2019 brought another stark move away from the balanced split seen in 2018. Notably, Manufacturing, Industrial and Energy (MIE) companies increased their share further, to 39% of net take-up during the period, strongly driven by the large leases of ExxonMobil, ThyssenKrupp and TÜV Rheinland. All other sectors saw their share from net take-up remain stable or decrease. Technology and Telecom companies stood for a 13% share, while other sectors that were amongst the most active in 2018 – including financial companies and public sector entities – fell behind to marginal levels during the period. As such, 2019 became the year of MIE companies, which stood for 32% of the total annual new demand, followed by Technology and Telecoms with 14%, business services accounting for 10%, while the remaining sectors remained in single digits.

As a result of record high occupancy across the new completions combined with continued demand pressure in the existing stock, absorption remained strong in H2. Throughout 2019, net absorption totalled 133,800 sq m, exceeding the new supply volume by 90%. However, it is clear that absorption is increasingly tied to new supply, as the slimand fragmented vacancy in the existing stock holds less room for meaningful demand. Central Buda was the only submarket to register marginally negative absorption (-1,800 sq m), while the remainder all saw their occupied stock expand. The clear winners were Central Pest (+46,500 sqm), SouthBuda (+35,200 sqm) and the Váci Corridor (+28,200 sq m), more distantly followed by Non- Central Pest (+11,400 sq m) and North Buda (+8,600 sq m). The Periphery and the CBD saw marginally positive net absorption.