Industrial market analysis Q3 2013

For the first time this year, a new building was completed in Q3. The first phase in Budapest Airport Business Park (10,800 sq m) had been already pre-leased to DHL earlier this year. The modern industrial stock in Budapest and its surroundings totalled 1,833,640 sq m at the end of Q3 2013.

The total volume of lease transactions reached 71,380 sq m in the third quarter of 2013. This is a remarkable increase of 35% compared to the total of Q1 and Q2. Renewals still account for a majority of the leased space with 52% share in Q3.

Largest transactions this quarter were closed in ProLogis Park Budapest-Gyál and in BILK, over 20,000 sq m each.

However, demand Q3 2013 failed to come close to the level measured a year ago. Take-up reached 34,450 sq m – a 46% decline on Q3 2012. Renewals reached 36,930 sq m, marking a 72% decrease on the same period last year.

In Q3 BRF registered 22 transactions, out of which five surpassed 5,000 sq m. Average deal size increased to 3,245 sq m. 78% of all deals were closed in logistics parks with an average size of 4,642 sq m. Average size was smaller in city logistics schemes with 1,567 sq m.

Vacancy continued to increase further to 23.8% – an upward trend seen for the fourth consecutive quarter now. The rate moved out by another 0.9 percentage point on previous quarter and stands now by 4.7 pps higher than a year ago. Increasing vacancy in logistics schemes reflects that despite the higher level of take-up, consolidation and downsizing still dominate the logistics market. On the other hand, city logistics schemes are marking a lower vacancy on q-o-q and y-o-y basis as well on the back of continuing interest for available space in such schemes.

Q3 2013

Logistics Park

City logistics

Total

Completions (sq m)

10,800

0

10,800

Stock (sq m)

1,648,390

185,250

1,833,640

Vacant space (sq m)

403,910

31,830

435,750

Vacancy rate (%)

24.5%

17.2%

23.8%

Lease transactions (sq m)

55,710

15,670

71,380

New (sq m)

11,270

6,270

17,540

Renewal (sq m)

30,500

6,430

36,930

Expansion (sq m)

13,940

2,970

16,910

Net absorption (sq m)

-16,110

7,310

-8,800

Source: BRF

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.