Industrial market analysis Q1 2012 (BRF)

The Budapest Research Forum (BRF) which comprises: CBRE, Colliers International, Cushman & Wakefield, DTZ, Eston International, GVA Robertson and Jones Lang LaSalle now reports its Q1 2012 industrial market data.

The size of modern industrial stock in Budapest and its surroundings totalled 1,806,350 sq m at the end of Q1 2012 (after a minimal stock correction from Q4 2011). In the first three months of the year no newly completed building came to the market, which mirrors the first three quarters of 2011.

The total volume of lease transactions so far this year totalled 47,694 sq m. This level represents a 47.2% decrease over the previous quarter and is less than half the amount recorded in the same period last year.

Fiege’s 19,135 sq m renewal was the largest deal of the quarter, accounting for 40% of the quarterly total tenant activity.  New leases equated to 28.2%, and expansions 10.9% respectively. The 6,300 sq m pre-lease transaction which will be realised in a BTS building due for completion later this year accounted for 13.2% of the total Q1 2012 total leasing activity.

22 industrial transactions concluded in Q1 2012, however, only two of these exceeded 5,000 sq m. The average transaction size was 2,167 sq m. Logistics parks showed demand for 44,208 sq m which provided 92.6% of the total leasing activity, with an average deal size of 2,600 sq m; while city-logistics demand amounted for 3,486 sq m with an average deal size of 697 sq m and accounted for the remaining 7.4% of Q1 2012’s take-up.

Mainly due to the lack of new completions on the market vacancy rate is 21%, which is a 1 percentage point increase compared to Q4 2011. At the same time the occupancy levels of Logistic Parks decreased to 79.6% and City Logistics increased nominally to 73%.

To conclude net absorption was negative in Q1 2012 accounting for -3,362 sq m which is mainly due to the large areas that vacated during these first three months.

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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