Renewals represented 55% of the total demand in 2018, due to the lack of existing quality space. Net absorption for last year was put at 153,000 sqm.
This low availability of contiguous industrial space in the Budapest area, combined with rising demand, has resulted in record low vacancy rates of 2.4% in a market with a total stock of 2.18 million sqm.
Six new schemes representing 120,000 sqm were handed over in 2018. Some leading developers are moving towards the speculative development option in established logistics parks, often as an addition to a built-to-suit (BTS) project.
“A record low availability of existing vacant space continued to boost renewals in 2018. Speculative supply is expected to enter the market in 2019,” comment Cushman & Wakefield.
Prologis has commenced construction of a 10,600 sqm speculative facility at Prologis Harbor Park, due to be delivered next March after a six month construction period. The logistics park operator and developer has also undertaken development of a 39,000 sqm speculative facility at Prologis Park Brno in Czech Republic as part of what the company describes as a “disciplined increase in speculative building” across its European portfolio.
“Our strongest markets include Germany, the Netherlands, Czech [Republic], Italy, Spain, Hungary and Sweden in order of net operating income,” says Ben Bannatyne, president of Prologis Europe.
Another regional industrial developer, CTP plans to go ahead with a 32,000 sqm speculative development at CTPark Budapest West, approximately 19,000 sqm of which is already let, according to CTP.
The company is also constructing a 22,000 sqm facility at CTPark Budapest South and plans to start construction of 20,000 sqm of space at CTPark Budapest East, where there is 80,000 sqm built-out potential. At CTPark Arrabona in Győr, Dana Hungary (a major Audi supplier) has requested a 9,000 sqm extension to its existing facility.
Cushman & Wakefield estimate the 2019 industrial pipeline for the Budapest area at 130,000 sqm, with 24% of the pipeline already prelet. Headline rents rose by a little over 13% in 2018 and currently stand at EUR 4.75 per sqm per month for BTS and EUR 4.25 for existing stock.
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