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Report: Capital sees record in industrial space gross occupier activity

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Budapest’s industrial market last year registered the highest gross occupier activity to date amounting to 386,625 sqm last year – a 55% progression on 2013 – while net take-up totaled 221,775 sqm and represents 36% year-on-year growth, professional services and investment management firm JLL reported today in its Q4 2014 Budapest City Report.

According to the report the active occupier market shows that the long-awaited recovery of the industrial market has finally gained momentum. JLL noted that the total transaction volume of logistics and industrial premises amounted to some €72 mln in 2014. The largest industrial transaction of the period was an owner occupier deal by Audi, who bought its BTS 70,000 sqm warehouse/production line in Győr.

“Based on the latest transactional evidence, the prime office yield stands at 7.30%. Prime retail is at 7.25% and prime logistics now stands at 9.25%... According to our opinion, 2015 will see increasing interest for Hungarian assets from international investors and local funds. We also expect the National Bank to continue its real estate investment program,” the report says.

“The rapidly improving market environment is expected to be reflected in rental terms and conditions later in 2015. As the high quality vacant industrial units are becoming scarce, effective rents will eventually start rising in modern logistics parks. On the other hand, the positive environment won’t relate to secondary warehouses yet, which will not be able to improve rental terms due to their quality shortcomings,” Rita Tuza, Head of Research at JLL Budapest said.

Benjamin Perez-Ellischewitz, Head of Capital Markets at JLL Budapest said that “in 2015 we already saw a high profile acquisition by ProLogis, which bought M1 Business Park from CA Immo. This logistics park is the largest income producing asset to be transacted in recent years and JLL acted on behalf of the buyer in the transaction. We expect further assets to be sold throughout the year considering the growing investor appetite for this asset class.”

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