Industrial and logistics properties-Market Report 2004/2

The market segment of logistics and industrial properties continued to remain balanced in 2004. In the segment of state-of-the-art warehouse properties, there was some drop in demand without a significant increase in the supply on the market; the bulk of new construction involved the expansion of logistics parks that were already operating successfully.

Among the new projects on the modern logistics park market, we should mention the East Gate project of Wallis Real Estate, next to Fót (with an area of 160,000 sqm available for construction), and the WDW Logistics Park started by W-Go at Szigetszentmiklós (11,400 sqm). The second stage of the Euro Business Park located at Törökbálint, named Shark Park and having an area of 21,210 sqm, will become operational in the second half of the year (with an occupancy of about 70% at the opening); the main tenants include companies such as Frans Maas (4,500 sqm), Schneider Paper (4,000 sqm), and Cemelog (2,000 sqm). The next, 29,000 sqm stage of the project, called Camel Park, is in the implementation phase. Prologis is developing a property purchased on the territory of Euro Business Park, on behalf of Geodis (23,300 sqm). The total volume of the completed rental transactions in Harbor Park, developed by H.I.D., reached 24,300 sqm, and former tenants of the park announced their interest in a portion of the area still available for rent. In 2004, the transactions of the Nagytétény-based park included: Rewico (9,700 sqm), the Ringier Publishing House (7,600 sqm), Schneider Electric (5,000 sqm), and Hensel (2,000 sqm); 8.4% of the rented area is office space.

Built as an AIG/Lincoln investment project and sold to Europolis Invest, the area rented in the Airport Business Park reached 20,150 sqm in 2004 (of which, offices represented 3,450 sqm). Among the new tenants of the park, (operating with an almost 100% occupancy rate), that we registered are Swissport Cargo (1,400 sqm), DHL (1,260 sqm, moving in during 2005), BMW Hungary (1,140 sqm), and Panalpina (960 sqm). At the same time, decisions in favour of increasing their rented area were made by Csemege Match (9,000 sqm) and Rossmann (4,000 sqm). Meanwhile, in the M1 Business Park, the final stage was launched with the finishing work on the B building: the facility, with 22,000 sqm of warehouses and a total office space of 2,700 sqm, will be completed in three phases, probably before the end of 2006. In the project at Páty, DHL, Kühne & Nagel, Stora Enzo and Willi Betz also rented new halls (a total of about 12,200 sqm of warehouse space and 1,500 sqm of office space).
In the Budapest Intermodal Logistics Center (BLIK), which primarily supports the logistics operations of the Waberer’s Group, about 17,400 sqm were completed; in addition, work on the 26,000 sqm hall reserved by Schenker was also started.

According to our analysis, a new trend appeared in the use of warehouses by small and medium enterprises in 2004: several companies submitted applications for smaller area land plots, suitable for the construction of their own storage facilities. Interest in buildings for one’s own use has clearly been strengthening in the towns and villages in the agglomeration and their radius of attraction, and within this, especially along the M0 motorway and its neighbourhood. According to our data, the selling prices of areas suitable for both warehousing and trade in the proximity of the M1 and M7 motorways (that is, primarily in the western part of the agglomeration and in the villages next to southern Buda) was in the range of 11-13,000 HUF/sqm in 2004. Nevertheless, warehouse development for one’s own use can be arranged at more favourable terms in the southern sector of the agglomeration on the Pest side: here, the average selling price for land was approximately 9,000 HUF/sqm.

On the basis of our analysis, there was no change in the typical rental fee range during 2004: the typical monthly rental fee of a state-of-the-art warehouse was in the range of 4.8-6.2 EUR/sqm. On the market of second-hand warehouses, the range of 3.6-5.6 EUR/sqm in rental fees proved to be stable, at the same time, in the region of Northern Buda where demand far exceeds the available stock of storage, a slight, almost unperceivable increase has started in rental fees (about 4-6%). According to our expectations, the launch of new projects in 2005 may somewhat deteriorate the general occupancy levels in the logistics parks, nevertheless, we de not forecast a major drop in demand. According to our forecast, the accession of our country to the European Union will give an impetus to development activities in the eastern and southern regions of the country, even though the logistics – strategic – positions of the capital and of the emerging central region is not expected weaken.