Industrial Demand High but Market Underperforming
The Hungarian industrial sector is generally regarded as underperforming in comparison with its Central European neighbors. However, demand is present and there are development opportunities with Hungary having the lowest vacancy rate in the region at 1.8%, a historical low in a market in the greater Budapest area with a total stock of 2.2 million sqm.
Few existing logistics schemes have 5,000 sqm plus spaces available according to the Budapest Research Forum (BRF), consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary.
“Moving forward, the market is expected to remain built-to-suit dominated, with some speculative developments picking up. The 2020 pipeline is already well prelet,” comments Cushman & Wakefield.
The developer-led market is mainly limited to the Budapest area in contrast to the Czech Republic, Poland, Romania and Slovakia, in all of which a functioning commercial market has been established in logistics and industrial hubs outside the capital.
Registered stock is spread across countries elsewhere in Central Europe while in Hungary stock is collated in the Budapest area. In Hungary, companies establishing light industrial facilities in regional cities have tended to develop their own facilities.
“The Hungarian market produced high vacancy levels during the years 2007-2014, but since then, the market has performed nicely, and Hungary now has very low vacancy, which means more construction is needed,” says Ferdinand Hlobil, head of CE industrial at Cushman & Wakefield.
“In Hungary, expansion outside Budapest will continue. Compared to the surrounding countries, Hungary still has further potential for development in the regions,” Hlobil explains.
An estimated 110,00 sqm of industrial space is expected to be delivered in Hungary this year, with a total of 180,00 sqm under construction according to JLL. The consultancy puts vacancy at below 2%.
The Central European industrial and logistics market is continuing to thrive as total stock across the five Central European countries identified in this article stands at more than 33 million sqm, according to Cushman & Wakefield.
Poland and the Czech Republic continue to be the dominant CE markets with regard to market activity: stock for Poland stands at around 18 million sqm across the country, while it is 8 million sqm in the Czech market.
As of the turn of the year there was 1.9 million sqm of industrial space under construction in Poland, including 450,000 sqm in Upper Silesia and more than 500,000 sqm in the Warsaw area, according to JLL. Romania is also emerging as a major industrial and logistics market with 2.5 million sqm of stock.
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