Industrial properties

Market report Industrial

Strengthening developers’ activity

Following a negative period between 2011 and 2015 logistical property developments have taken up, owing to the vacancy rate which fell below 10%.

In the first six months of 2016 an area of 22 thousand square meters was handed over, which is four times bigger than the volume last year. New properties, the size of which is nearly 60 thousand square meters are being built, they are expected to be completed before the end of the year, and there is a prelease agreement for almost the half of them.

New industrial and logistical properties – of around 20 thousand square meters – are planned to be handed over by 2017, but considering the short completion time of logistical halls this figure may rise considerably.

Developers are more and more willing to start investments on a (partly) speculative basis. The new developments are taking place mainly in the southern agglomeration of Budapest.

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Market Report 2015 Industrial Properties

Development bottoming out

In the segment of logistics and industrial properties only the fourth quarter of 2015 brought new completions; as such, the development volume dropped compering to an already low base. Similarly to the previous years no new speculative developments are expected.

As known, logistics property development output dropped below 60 thousand square meters in 2010 when speculative schemes vanished from the market due to the crisis. Due to an improving economic situation, increasing consumption and retail trade the rate of stock expansion is expected to grow in 2016; however, total stock is not forecasted to surpass 2 million square meters.

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BRF Industrial property market report Q4 2015

The Budapest Research Forum (BRF, which comprises of: CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary) sets out below its Q4 2015 industrial market snapshot.

In the fourth quarter of 2015 the modern industrial stock in Budapest, and its surroundings, expanded by 39,340 sq m to stand at 1,881,650 sq m. This increase comprised of firstly, a 5,000 sq m new development for Ekol Logistics in the  Budapest Dock, and secondly, a 34,340 sq m fully occupied, existing warehouse, which was purchased by the Czech CTP Group, and therefore added to the industrial stock figures. These two assets were the only additions to the stock in the entire of 2015.

  Source: BRF

 Total leasing activity amounted to 81,190 sq m in Q4 2015, which is more than 30% higher than the volume registered in Q3 2015. Roughly 66% of this space was generated by renewals, new leases represented 22% and expansions 12%. No pre-leases, or new built-to-suit agreements, were registered in the Q4 2015.

The annual total leasing activity equated to 353,220 sq m, which was just slightly (5.5%) below the 2014 record volume.

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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.

 

 

Industrial market analysis Q4 2012 (BRF)

Budapest Research Forum (BRF, of which Eston International is a member) reports its freshest industrial property market report on the 4th quarter of 2012.

By the end of 2012 modern industrial stock in Greater Budapest reached 1,822,933 sq m following the handover of three new buildings with a total area of 16,448 sq m. Two of these had been pre-leased partially or entirely before the completion already.

After the record-breaking statistics of Q3, last quarter’s demand remained quite modest. Total leasing activity (TLA) registered 22,181 sq m – the lowest on record this year. 52% of TLA was made by new leases or expansions, while renewals accounted for 48%, down from 62% last quarter.

With the exception of Waberer’s renewal, there was no lease signed for space above 5,000 sq m in last quarter, creating a remarkable change compared to the previous quarter. Average deal size went down from 6,400 sq m in Q3 to 1,300 sq m in Q4.

For the first time this year, total stock increased in Q4 when three parks expanded, each by adding a new building. Airport City’s was 6,884 sq m, South-Pest BP’s was 5,817 sq m and Europa Center’s was 3,747 sq m. The latter remains vacant at present.

Average vacancy rate in logistics parks did not change in Q4, remaining at 19.1% following the sharp decrease seen in Q3. In case of city logistics the rate increased to 21.7%. Measured against the total industrial stock in Greater Budapest, the rate stands at 19.4% with 353,350 sq m space being vacant at the end of 2012.

Total leasing activity on an annual level reached 354,743 sq m, up by 8% on 2011. However renewals’ share increased further, making take-up in 2012 short on the previous year’s level. In the first half 2012 net absorption was negative but it turned strongly positive in H2. Annual net absorption reached 40,652 sq m.

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Industrial market analysis Q2 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.

In Q2 2012, no new industrial developments were completed, therefore the size of modern industrial stock in Budapest and its surroundings totalled 1,806,485 sq m.

The total volume of lease transactions reached 88,370 sq m. This level surpassed the previous quarter by 85%. In the first half of the year 136,064 sq m industrial space was let, representing a 23% decrease compared to the same period of the previous year.

The share of renewals reached the highest level registered since 2010, totalling 59,676 sq m, 67.5% of the total leasing activity. The quarter’s two largest transactions were renewals, both UTI and Diebold renewed with ProLogis.

New leases accounted for 28% market share, no change compared to Q1 2012. Expansions took 4.5% share.

22 leasing transactions were closed in Q2 2012; however, the average transaction size was 4,017 sq m, the second highest level registered since 2010. Logistics parks amounted for 97% of the demand, with an average deal size of 5,038 sq m. 7,755 sq m were let in city-logistics with an average deal size of 1,293 sq m.

Vacancy rate increased by 38 basis points and currently stands at 21.4%. As there weren’t any lease renewals in city-logistics schemes net take-up almost resulted 100% in the decrease of vacant warehouse units, the vacancy rate decreased by more than 4 percentage points. As this type of scheme represents only 10% of the total stock, it does not significantly affect the total market vacancy rate.
During the first half or the year the vacancy rate increased by 51 basis points.

Net absorption remained in the negative range in Q2 2012 accounting for -6,389 sq m.

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