Office
For several years, discussions surrounding the office sector have been dominated by remote work, hybrid working models and rising vacancy rates. Many questioned the long-term role of the office, while both occupiers and investors became increasingly cautious in their decision-making.
However, the latest international market data suggests that the sector is entering a new phase. The debate is gradually shifting from demand uncertainty to the future availability of high-quality office space. These are among the key conclusions of Newmark VLK Hungary’s latest market analysis.
Across Central and Eastern Europe, new office development activity has fallen to historically low levels. According to multiple market studies, the CEE region delivered just over 200,000 square metres of new office space in 2025, representing the lowest annual volume recorded in decades. Only modest supply growth is expected in 2026.
This slowdown is primarily driven by elevated construction costs, higher financing costs, increasingly stringent ESG requirements and a cautious development environment. As a result, many planned projects have been postponed, redesigned or cancelled, leading to a significant reduction in future office supply across the region.
At the same time, occupier and investor demand is becoming increasingly selective. Rather than a general lack of demand, the market is now characterised by what industry experts describe as “quality-led demand”. Companies are seeking energy-efficient, sustainable, well-located and technologically advanced office buildings that support both employee experience and long-term business objectives.
International investor surveys reinforce this trend. Research conducted among leading global real estate investors indicates that offices have once again become one of the most sought-after commercial real estate sectors. Nearly 70% of institutional investors surveyed expect to increase their office allocations over the coming years, making offices the most targeted commercial real estate asset class ahead of residential and industrial-logistics properties.
Importantly, this should not be interpreted as a recovery of the office market as a whole. Investor demand remains heavily concentrated on premium, ESG-compliant assets. Meanwhile, secondary and obsolete office stock continues to face significant pressure, and adaptive reuse projects — including office-to-residential and office-to-hospitality conversions — are becoming increasingly common across Western Europe.
Hungary may soon experience the same market dynamics already visible in several mature European markets. Political developments, improving expectations regarding relations with the European Union and the potential release of EU funding could all contribute to a stronger investment environment. According to data published by the National Bank of Hungary, the country’s commercial real estate investment market already showed significant recovery during 2025, while the share of foreign investors began to increase once again.
Should macroeconomic conditions improve over the next 12 to 24 months, country risk premiums decline and international capital flows strengthen, Hungary could increasingly face a shortage not of office space in general, but of modern, future-proof office assets capable of meeting evolving occupier and investor expectations.
For many years, occupiers operated in a market where multiple suitable alternatives were readily available. If one option failed to meet their requirements, another comparable solution could usually be found within a short period of time. That environment is beginning to change.
With office development activity at record-low levels and the pipeline of prime office opportunities continuing to shrink, occupiers are increasingly being forced to make leasing decisions earlier in the cycle than they have in recent years. At the same time, businesses face higher levels of economic and geopolitical uncertainty than at any point in the last decade.
As a result, one of the defining questions of the next real estate cycle will not be whether offices remain relevant, but who controls the limited supply of future-proof office assets. In a market where the growth of quality supply is expected to lag demand, ownership of these assets may become a significant competitive advantage for years to come.