Cushman & Wakefield expect low industrial vacancy and reasonably stable demand levels for Hungary going forward, with a focus on built-to-suit (BTS) and semi-speculative opportunities. Those projects that are already underway are expected to be handed over with a delay of one quarter, with 47,000 sqm of new space is expected to be delivered in the second half of the year.
Key completions for the first half of the year include 23,000 sqm at CTPark South, 18,000 sqm at East Gate Business Park by Wing, 13,000 sqm at Prologis Park Budapest-Harbor and 10,000 sqm at Budapest Dock Szabadkikötő.
The industrial market in Hungary (and wider Central Europe) is seen by analysts as the sector in the most positive position in the post-coronavirus crisis period. Continued low vacancy rates and stable rental levels are forecast due to high demand; however, due the lockdown many speculative projects have been put on hold despite the strong demand for space.
In the current market environment, it can be difficult to differentiate between speculative and BTS projects.
“Depending on location, developers will be using different development strategies,” comments Ferdinand Hlobil, head of Central European Industrial at Cushman & Wakefield.
“Some locations will need speculative developments to attract more demand, while other locations might be under high demand pressure anyway. So developers could ‘sell the space from the plans’,” he adds.
Developers are essentially working on BTS developments with a speculative element, Paweł Sapek, head of Central Europe at Prologis, says.
“Depending on customer needs, we are able to deliver both speculative and BTS space. In Europe, our assets are located in the largest consumption markets and key logistics hubs, which we believe will be most resilient in an economic downturn,” Sapek says.
“The vast majority of our customers in Europe have remained open for business and, even at the peak of the COVID-19 outbreak in March to April, 95% were still open,” he adds.
As of this summer industrial stock for Central European (Czech Republic, Hungary, Poland, Romania and Slovakia) stood at 37.5 million sqm; by end of this year, that figure could reach 40 million sqm, according to Cushman & Wakefield.
Poland and Czech Republic continue to be the dominant Central European markets. Both countries benefit from their geography in major logistics and industrial networks, notably with close proximity to Germany.
Romania is also emerging as a major industrial and logistics market with more than 4 million sqm of stock. Major developments are ongoing in the western Transylvania region of the country, an indication that a regional industrial network has emerged in the country outside of Bucharest.
The Hungarian industrial sector is generally regarded as underperforming in the volume of deliveries in comparison. Further, the developer-led market here is mainly limited to the Budapest area; a functioning commercial developer-led industrial market has not been established outside the capital.