Címke: industrial

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 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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Hungary’s first indoor adventure park opened with Eston-contribution

Eston realizes special industrial property ideas

Hungary’s first inside sports- & adventure park has opened with the contribution of Eston property consultants on Hunyadi János út (11th District). Finding the appropriate property and the successful negotiation have been concluded by Eston advisors.

With his unusual property requirements the client turned to Eston, who vigorously began to gather potential properties suitable for the client’s special needs. Operator of the adventure park aimed to have a roofed place with large interior height, which is easily accessible and is suitable to accommodate busy customer traffic, possesses car park and also its atmosphere fits to this special sports- and action park.

After several viewings and negotiation, the client finally decided to have a property in the 11th District, which suits all his requirements. The hall with its inner height larger than 8 meters is able to host various extreme adventure-, sports- and leisure facilities on 4500 sq m. The building is easily accessible by public transportation (buses and trams), has parking facility and the building is suitable for creating an adventure hall with unique atmosphere and design.

Ropes and zipline courses, inside skate lines, climbing wall, roller skate rink, streetball pitch and many other programmes can be tested in the action park, which provides possibility for beginners and professionals or even for a nice entertainment with the family or with friends.

With the contribution of Eston, eXbox Action Park has been opened during the summer for extreme experiences.

‘Although, industrial-logistics property market has suffered relatively fewer damages than other segments of commercial real estate in the last years, uncertain economic circumstances induced a fall-back in demand. As for our experience, non-traditional property demands have emerged recently, such as this inside entertainment & adventure park, with unique features. Eston team is always delighted to undertake assignments like this, since we are professionals in providing solutions for special property requirements, which has become our trademark.’ – says Ernő Kiss, Associate Director of Eston international.

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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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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Industrial properties – ESTON analysis 2010/1

The modern industrial stock did not grow much – neither in the capital nor in the greater metropolitan area in the second part of 2009.

Two new business parks extended their existing territories by 17,100 sq m altogether in the outer part of the 9th district, still inside the city borders. The final building of CityPoint9 (9,200 sq m) and the first phase of South Pest Business Park II (8,000 sq m) were delivered, from which the latter already reached 75% occupancy before handover.

In the greater metropolitan area, two new speculative developments were finished, offering approximately 30,000 sq m for rent. In the Eastern Region, bordered by the M5 and M0 motorways, Autoker Logistics Kft. extended the existing supply of M5 Gyál Business Park as a second part of the first phase, by 13,500 sq m.

In Dunaharaszti, Austrian IPD Group developed South Base Logistics Centre in two phases, now offering 16,000 sq m new warehouse and office space.

Solely one single BTS project was constructed in the past half year; Beltex-Ingatlan Kft. developed a new, 5,400 sq m building for BUNZL in the zone of Vendel Industrial Park in Biatorbágy.

Based on the above it is perfectly clear that the industrial development supply reacts very flexibly to market changes. Taking the high vacancy rate of the first half of 2009 as their basis, developers decided to postpone new development phases even if they obtained building permits for them. Or rather, only those with sufficient percentage of prelease were built. Nevertheless, total new industrial development volume for 2009 remained significant, as 166,000 sq m were built altogether, from which more than 70% in the first half of the year.

Concerning the whole year, lease renegotiations and extensions constituted the preponderance of the total take-up. However, tenant activity fell back – similarly to effects on the office market – therefore the total volume of new contracts was only approximately for 140,000 sq m. Tenants showed a livelier interest towards transactions in the final quarter: more deals were seen on the market than in the rest of the year.

Tenant demand for city logistics decreased, not more than 6,000 sq m was leased in total by new tenants in CityPoint9, Preston and South Pest Business Park.

The most significant deal in the agglomeration was also signed in the 4th quarter: CEVA logistics moved into ProLogis Batta for 38,700 sq m. Besides, Auchan signed a remarkable new lease in Viktória Industrial Park for 18,000 sq m.

Further significant new deals were mainly concluded in the M5-M0 East region, where the vacancy rate therefore dropped to 15%. Papyrus and Sauflon leased 7,000 sq m each, the former in BILK, while the latter in ProLogis Gyál. M5 Gyál Business Park greeted Elextronics as a new tenant, who signed for 5,000 sq m. The vacancy rate was around 19% in the greater metropolitan area and 26% within the city at the end of December.

Developers have valid building permits for more than half million sq m in the greater metropolitan area, which covers 14 modern industrial projects.

Development potential in city logistics is far more restricted as it lacks adequate volume of build-up areas. In addition, regulations on trucks – with a maximum weight of 12t and above – entering city zones also significantly influence tenants’ preferences as well. Business park tenants who can approach their premises free of charge via destination roads tend to stay in their current rentals, but those worrying about further regulatory restrictions look for new places around the M0 ring road instead.

Mostly due to the effects of oversupply, some deals in the past half year were concluded below rent levels pointed out by us. However, we believe that rents indicated in the table will be the norms in the long term.

Industrial properties – ESTON analysis 2009/2

The first six months of the year passed eventless on the industrial market of the capital, compared to the previous years. The segment, which was making progress at the end of last year, has now completely lost momentum. Based on previous years’ record take-up, many developers have piled up plots at strategy points (M0 line, airports) but they did not have the chance to begin the planned developments. Currently there is no opportunity to sell these plots; even the biggest industrial developers, which own broad portfolios worldwide, would not start new projects.

126,900 sqm of warehouse space was delivered in the first half of the year, therefore the total modern industrial stock in Budapest exceeded 1.5 million sqm by the end of the second quarter. At a guess, still around 53,000 sqm is expected to be delivered by the end of the year. The potential of the developers is obviously significantly higher than this; around 800 thousand sqm of space is ready to be developed.

Due to the narrowing financial situation, it has now become evident: developers do not have substantive possibilities to choose from; therefore, they do have to dismiss speculative developments for a while. From the projects announced for 2009, accord according to Eston experts, the construction of 118,000 sqm has positively been postponed this year. As it usually takes 4-6 months from the approach of the client to the signing of the contract, and furthermore, it does not take more than 4-6 months to build up these properties, it is difficult to estimate the take-up and delivery levels at the end of the year, since some build-to-suit projects may be constructed by the end of the year, as a result of the current negotiations. This volume, however, cannot be expected to be substantial.

The territory of the business parks inside Budapest has increased by a total of 50,000 sqm in the past half year. In the 9th district 9,100 sqm was handed over in CityPoint9, besides 3 developments have been finished in the outer districts during the past half year: In the 17th district (Rákosmente), the Mesterek Háza (6,600 sqm of warehouse and offices), in Soroksár BILK (10,000 sqm) and in Újpest, at the foot of the M0 bridge, Európa Center expanded by 14, 600 sqm (3 buildings). In the agglomeration, in the eastern region bordered by the M5-M0 motorways, 4 projects were handed over as well, totalling at 86,600 sqm, twice as much as in the city.

The development that was finished first this year was the second phase of Ablon Airport City Logistic Park (9,300 sqm) in Vecsés. Viktória Park (37,800 sqm) was handed over in Üllő, and furthermore a BTS project of Goodman, Airport City Logistics was finished, whose warehouse and office space was completely developed to the needs of the client (Rossmann – 27,000 sqm). 12,500 sqm were completed in the first phase of M5 Gyál Business Park, which is partly used by the developer, Autóker Logistics Ltd for its own warehousing and logistics services. Another 22,500 sqm are structure-ready, which can be easily and quickly developed in case a serious tenant appears.

ProLogis, the American industrial giant, who seemed to be an active market player until nows, has not developed in the first half year, besides the English Segro has also postponed the building of its previously announced projects, the Aerozone and the Ozone.

The Australian Goodman does not build new units either in Üllő, or in Gyál, moreover neither the next phase of Wing’s last year’s success product, East Gate Business Park is under construction on a speculative base.

According to the experts of Eston, the sector may accelerate on in the mid-term, for as part of the New Hungary Development Plan logistics and industrial parks can now gain financial support from the EU as well. The main goal of the tender process is to improve and help the logistics of international freight traffic, and furthermore to help the development of intermodal centres. The European Regional Development Fund would spend 12.5 billion forints on the winning tenders in two types of construction.

It is questionable though, whether there would be a developer who could exploit this opportunity in the current market situation, moreover knowing how unstable the future is. The demand side was far behind last year’s performance. The total space included in the lease contracts was about 40,000 sqm, 70% less than in the first 6 months in 2008. As a new phenomenon, more and more middle sized end-users are appearing on the market, who intends to buy, and previously operated their business in a conservative way. Therefore they have enough of their own equity or supported credit, which could lead to a favourable contract in the current circumstances. This segment has done its warehousing and production activity in leased properties previously and its market position is still stable. In their opinion, to invest in real estate is a good opportunity on the changed market environment, but they intend to buy solely under the previous price level.

The vacancy rate leaped to never seen heights (25%), as a result of competition and oversupply. Any further rising of the rate could stop by the end of the year, however. The main cause of this is that delivery is hardly expected for the second half of the year (53,000 sqm). The rent fees here are also under great pressure, just like in other segments: typical levels were between 3.4 – 3.8 EUR/sqm/month at logistics parks outside the city – but due to the tight competition even lower rents were seen – while business parks within the city boundaries were 4.5 – 5 EUR/sqm/month.