These are active in a market that is growing due to increasing logistics demand, as well as the need to meet significant FDI, notably in the electric vehicle and EV-related industries.

The latter has finally resulted in the development of I&L hubs outside of the capital, as has long been the development model elsewhere in CEE. Firms are developing in line with increasingly complex tenant demands for highly specified, sustainable and ESG-compliant industrial and logistics space in addition to the need to comply with the EU taxonomy. Reflecting this and rising vacancy rates, there is a distinct trend towards development on a built-to-suit model.

“Extensive speculative developments have resulted in visible vacancy around Budapest; however, there is still substantial demand for BTS and BTO [built-to-order] projects in the countryside. Nearshoring is on everyone’s radar, and though few actual developments have materialized so far, there are several interesting RFPs out in the market,” comments Gábor Kutas, founder and CEO of Recorde Asset Management.

There are 5.7 million sqm of modern logistics and industrial space in Hungary, according to the Budapest Research Forum, with 3.8 million sqm in the Greater Budapest area and 1.9 million sqm in provincial centers.

“Industrial fundamentals remain stable, but we are in an adaptation phase: national stock is 5.8 million sqm; vacancy has risen to 13.4% in Greater Budapest, and 10.8% on the regional level. As a strengthening wave, second-hand space hit the market, generating an alternative supply. Leasing is active as development continues, but these are more pre-let/BTS-led and location/quality-driven,” argues Máté Szoboszlay, business development and investment director at the Faedra Group.

Redevelopment of older industrial stock will become more attractive, both for location and cost reasons (a lack of good land, which can also be expensive in some areas), and due to regulations, according to Zsófia Korda, chief sales officer at Wing Industrial. There is clearly an objective to shorten supply chains by relocating production closer to Europe, she says.

Ádám Székely, co-owner of the Hungarian industrial developer Innovinia, says provincial locations are growing in importance across Hungary, with more active industrial and logistics development in regional cities. The company is continuing its expansion, primarily focusing on BTS facilities for manufacturers and third-party logistics.

“In regional markets, we continue to see light industrial requirements dominating demand,” agrees Balázs Czifra, director of sales and asset management at Innovinia. “When new manufacturing or assembly operations commence, such as BMW or the renewed Mercedes plants, we observe a sharp increase in demand from related suppliers and third-party logistics providers,” he adds.

BTS Preferred

The BTS development option has become the preferred option as manufacturing and distribution hubs have taken on greater significance, backed by more sophisticated tenant requirements.

“Developers and landlords increasingly need to develop in accordance with tenant-specific solutions, although this provides less flexibility from the perspective of landlords and developers with regard to future lettings,” comments Valter Kalaus, managing partner of Newmark VLK Hungary, on development strategies. Automakers or component suppliers are very exacting in what they want, he says, by way of example.

A shift towards the BTS development model is seen as providing developers with more opportunities to build according to tenant demands and specifications, starting from consultations in the initial design phase and continuing throughout construction.

“The balance between speculative and BTS development depends largely on customer risk appetite and financing conditions. Right now, we see a trend toward more BTS projects as customers prioritize customized solutions,” says Zsuzsanna Hunyadi, director of leasing and customer relations at Prologis Hungary.

“However, prime locations still warrant selective speculative development. In Budapest and key regional hubs, we maintain a hybrid approach: speculative developments for locations with proven demand, while BTS is the preferred route for more specialized industrial clients,” she explains.

“The strategy allows us to stay flexible while ensuring optimal occupancy rates. What we foresee is that speculative development in the Greater Budapest area will remain moderate in 2025, while BTS projects, especially for production, will gain momentum in key regional locations,” Hunyadi says.

High-tech Drivers

Wing’s Korda believes that high-tech and energy-intensive manufacturing, such as battery production, electronics, and pharmaceuticals, will remain key drivers of demand, along with logistics.

“The market will remain stable; however, I do not foresee the same level of explosive growth we saw between 2020 and 2022. In both Southern and Northern Europe, we are seeing rising interest in data centers, and green energy projects, such as the integration of solar parks with industrial parks, are capturing an increasingly significant share,” she comments.

Sustainability accreditation is becoming the norm in the upper strata of the industrial sector, with players developing more highly specified and high-level BREEAM- and LEED-accredited complexes. A high level of green building certification has become a requirement for industrial assets in response to demand. Further, one of the key sustainability requirements is now the need for ESG data for reporting purposes.

ESG considerations play an increasingly tangible role in project design. While developers are committed to aligning with the latest sustainability requirements, long payback periods necessitate rational and selective implementation, according to Czifra. The relevance of certain ESG features also depends on the building’s use; for instance, photovoltaic systems may be less viable for logistics operations with relatively low electricity consumption.

Beyond providing high-quality, contemporary buildings, it is now essential to ensure the availability of adequate utilities, particularly electricity and water. Developers must also maintain firm control over local town-planning and regulatory processes. This is especially critical for the automotive industry, primarily for EV manufacturers and their suppliers.

Due to recent regulatory changes, converting land into development sites has become more difficult. This has created clear challenges for developers, while simultaneously allowing landowners to drive up the prices of suitable plots, Czifra concludes.

This article was first published in the Budapest Business Journal print issue of October 17, 2025.