Industrial properties-Market Report 2005/1

The segment of warehouse properties has remained balanced in the first half of 2005. The growth-rate of developments diminished as the market experienced a slight decline in demand. New large-volume projects were absent in the field of warehouse investments.

Newly-opened modern warehousing bases totalled nearly 50,000 sqm by the middle of the year, mostly thanks to the expansion of existing industrial parks. The first 10,000 sqm hall was completed in the Parkridge Logistics Park of Szigetszentmiklós. At East Gate, the new logistics development of Wallis Real Estate in Fót, construction of the first build-to-suit warehouse, located on a 3-hectare plot, is underway; furthermore, the stage is all set for the speculative development of a 10,000 sqm warehouse.
The warehouse base has been extended by 18,000 sqm at Prologis M5; the opening of the new facility is expected by the end of the year. Expansion is on its way at BILK too; owner and major tenant Waberer’s has opted for the use of a further 23,000 sqm of warehouse space. Anda Present signed a rental contract with Harbor Park in the first half of the year (4,500 sqm).
OTP REIT continues development of a logistics center, Aquincum Logistics Park, which is located in District III, a hot market of small-medium scale warehousing bases. The project offers warehouse space on 5,000 sqm and offices on 2,000 sqm. The massive interest already generated by the project can be demonstrated by the fact that 60% of the rentable area had been let by the 3rd month after launching the project. Tenants’ main drive was to relocate their base within the borders of District III, into a more sophisticated warehousing environment. The size of warehouses occupied by wholesale companies averages at 1,000 sqm.

Investor confidence increased in the segment of private logistics center developments. CBA opened its 30,000 sqm center at Alsónémedi (South Pest agglomeration), where the establishment of further accessory facilities is expected in the near future. Alexandra Publishing is locating its new warehousing base at the Pécs Industrial Park. According to market information, Magyar Suzuki Rt. plans to locate its own logistics center at Budaörs. The building site is in the company’s possession already. Transdanubia Kft. plans to extend its given warehousing bases in Hungary by launching a new 4,000 sqm project near the country’s western border in Lébény.

Net monthly rents in warehouse submarket range continue to stagnate in the 4.8 – 6 €/sqm interval and average at 3.5 – 5.5 €/sqm for second-hand facilities. We expect to see a minor rise in warehousing projects by the end of the year, but as the core of this supply-growth represents built-to-suit facilities, the level of rents is not expected to change. The implementation of published transport development plans combined with the Eastern expansion of the European Union are bound to result in a rise in demand for development sites, but actual project plans should be due only when Hungary’s position within the CCE-hub becomes clear – that is, the earliest date is next year.