Industrial property market analysis Q4 2011 (BRF)

Budapest Research Forum /BRF/ (of which Eston International is a member) reports its industrial market report covering Q4 2011.

The size of the modern industrial stock in Budapest and its surroundings stood at 1,807,207 sq m at the end of Q4 2011. Contrary to the first nine months of the year, one new development, the 10,100 sq m size BILK “L” building was handed over between October and December.

The total volume of lease transactions reached 100 891 sq m in Q4 2011, which converges to the high quarterly level of Q1 2011. This level represents a 49.4% increase over the previous quarter and almost double compared to the same fourth quarter of 2010.

The share of renewals among lease transactions remained high amounting to 61,623 sq m, which accounts for 61.1% of total tenant activity.  New leases accounted for 27.3 %, and expansions for further 11.7 % while no pre-leases were signed in the last three months of 2011.

In total 24 industrial transactions were concluded in Q4 2011 out of which only five exceeded 5,000 sq m. The largest three were renewals and two were new lease contracts. The average transaction size in logistics parks reached 4,831 sq m. Demand for city-logistics yielded five contracts amounting to 9,090 sq m and the average deal size was 1,818 sq m. Both averages are the highest in 2011.

Due to the high level of demand the ratio of the vacant space decreased by 1.5 percentage points to 20.9% of the total stock in Q4.  Occupancy in both categories, in logistics parks and in city-logistics increased to 79.8% and 72.5% respectively.

The level of net absorption was positive for the second time in 2011. New leases and expansions were signed on 39,300 sq m. The new warehouse spaces were handed over with no vacant space, meanwhile, tenants only vacated or reduced their space on less than 14,500 sq m.

In 2011 the total size of lease transactions was 329,100 sq m, which represents a 57% increase of tenant activity compared to 2010. Regardless, the total size of the occupied space decreased by 23,900 sqm from January to December.

Note on the methodology:
BRF analyses modern industrial properties located in Budapest and Pest County, completed after 1995 for letting purposes, comprising a minimum of 2,000 sq m space in terms of city-logistics or minimum of 5,000 sq m space in terms of logistics park warehouses. The industrial stock excludes owner occupied buildings.


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