CTP: Bigger Logistics Developments on the Way


Dávid Huszlicska

The European developer CTP is now the most significant industrial park owner/occupier in Hungary, according to the company. Its portfolio of 660,000 sqm of gross leasable area (GLA) is almost entirely leased. By yearend, the plan is to have 750,000 sqm of space across the country, rising to one million by the end of 2022.

CTP currently has eight projects under construction in the Budapest area and provincial cities such as Győr, Debrecen, Szeged, Komárom, and Tatabánya. Of the 235,000 sqm currently under construction, 60% is pre-let; work of a further 322,000 sqm of pipeline is due to start in the near future.

The firm is a top-five industrial property developer and manager in Europe, and the largest in the CEE region, holding a total portfolio of more than 6.3 million sqm GLA. The group says it is continuing to gain market share aims to have 10 million sqm by 2023.

The entire portfolio is BREEAM certified and is on track to be verified carbon neutral in 2021. The Budapest Business Journal spoke with Dávid Huszlicska, country head of CTP Hungary, about its operations here and the future of the logistics and industrial market. 

BBJ: How do you see the Hungarian industrial market developing in the post-COVID environment?

Dávid Huszlicska: Companies with a presence in the region are nearshoring by bringing stock or production closer, rather than have it in a place where the supply chain [potentially] causes a risk. Existing companies are growing, but we also see many new players coming in. Just as the industrial market has new developers, we are also seeing new tenants. We have seen strong growth in e-commerce and, at the same time, a parallel increase in the automotive sector.             

BBJ: How do you see your role as a CEE and nationwide logistics/industrial park developer?

DH: Our tenant retention rate in Hungary is 100%, and on a group level, our overall retention rate is more than 95%. We are flexible regarding requirements from both a technical and locational perspective. In Central Europe, we are active in capital cities, in the vicinity of capital cities, and in the countryside. The Hungarian market is very heavily Budapest-biased as perhaps logistically, many companies prefer to stay on the [M0] ring road in and around Budapest. There are a lot of companies that see the possibility of going to the countryside; we could see this [increasingly] happening thanks to local government support to enable a number of new companies to enter these cities. These regional cities are growing in importance, but they are still not where they should be, although Debrecen is a good example of how to do things. There is still a very large untapped potential in these hubs.

BBJ: Do you see more speculative development? How critical is this for market growth?

DH: Hungary does need more product in what is a very overheated market. We do see speculative development activity, which is absolutely justified. We still have a long way to go before the market cools down.   

BBJ: What are the main challenges facing plot sourcing, permitting, construction, and development process?

DH: Land is available in abundance, but timing is a big question as some land takes a year or two to bring to development status. So, timing is a challenge. So is the availability of construction materials and labor. The average development period is 12 months. This consists of three months of permitting and design and a nine-month construction period. We have streamlined our processes, and our last three buildings have been handed over before the deadline.

BBJ: How are tenant requirements changing, and to what extent are sustainability and sustainability accreditation a central part of this?

DH: Tenants are getting used to the fact that their nuances or requirements should and can be handled by the developer. From our side, we are have always been a partner with our tenants, and we do any type of fit-out that the tenant requires.

We use BREEAM in-use “Excellent” for our new buildings. These are more expensive to develop, though not enough to be of major concern to tenants. We always discuss the cost of occupancy with tenants and potential tenants, and one of the things we do is a breakdown of how energy efficient our buildings are. We plan to use solar panels increasingly in our portfolio.

I think that size-wise, we will see larger requirements and [therefore] some bigger buildings coming up. We have not seen 100,000 sqm projects in Hungary yet, but they are coming. Currently, our average deal size is between 10,000 sqm and 25,000 sqm. We have a 46,000 sqm deal that we did a couple of weeks ago.

BBJ: Would you say that industrial is the investment sector of choice, along with office?

DH: We keep products in our portfolio and at the same time like to undertake purchases. We have signed a purchase agreement for a new 25,000 sqm building in Szombathely. In general, companies keep hold of their industrial assets and, therefore, there is very little product available.

This article was first published in the Budapest Business Journal print issue of July 30, 2021.

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