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Constricted Industrial Supply Encourages Preleases

An estimated 24,000 sqm of space was added to the Budapest industrial market with deliveries at the Airport City Logistic Park by CPI and at Prologis Park Budapest Harbor.

CTPark Budapest West

This brings the total modern industrial stock in Budapest to 2.2 million sqm according to the Budapest Research Forum (BRF), consisting of CBRE, Cushman & Wakefield, Colliers International, Eston International, JLL and Roberson Hungary. From this figure city logistics facilities represent almost 200,000 sqm of space.  

“Limited warehouse supply has increased preleases by 19% year-on-year and further increased the share of renewal transactions. The pipeline promises a 18% increase in supply compared to 2018,” commented Cushman & Wakefield.

Despite rising demand, further development of the Budapest industrial market continues to be impeded by a limited supply of space, with take-up dominated by renewals. This represented 58% of total demand in the first quarter. Vacancy has fallen to 3% with only three existing parks offering warehouse spaces of more than 5,000 sqm.

Total take-up for the first quarter is estimated at 83,000 sqm, with only one project signed for more than 10,000 sqm; the largest transaction was a 28,000 sqm renewal at Prologis Park Budaörs. The biggest prelease was an 8,800 sqm deal at CTPark West. The Czech-based regional CEE industrial developer and park operator CTP says it plans to go ahead with a 32,000 sqm speculative development at the complex.

Central European Boom

The Central European industrial markets are continuing to boom. The Czech Industrial Research Forum (CIRF), consisting of CBRE, Colliers International, Cushman & Wakefield and JLL, has traced almost eight million sqm of modern developer-led product across the country, with approximately 168,000 sqm delivered to the market in 13 industrial parks in the first quarter.

As elsewhere in Central Europe, vacancy remains at less than 5%. This means there is an estimated 380,000 sqm available for immediate occupation. An estimated 522,000 sqm of space is under construction, 18% of which is located in the greater Prague area. In contrast to Hungary a thriving developer-led industrial market is established in regional cities beyond the capital.

With regard to Budapest, the lack of available warehouse space and the rising costs of construction has put upward pressure on rents, which has resulted in around 19% year-on-year growth according to Cushman & Wakefield. The company estimates prime logistics rents of EUR 4.75 per sqm per month for built-to-suit space, compared to EUR 4.5 per sqm per month for existing stock.

The further Hungarian pipeline for the year is estimated at 118,000 sqm and 13% of this is already prelet.