Signs of revival showing in industrial property market
Budapest’s industrial real estate market saw take-up activity reaching 54,540 square meters (sqm) in Q2 2010, a 50% increase compared to the previous quarter, the Budapest Research Forum (BRF) said in its latest report.
This was due to the fact that nearly twice as much lease agreements were signed during the quarter. The majority of the leases comprised lease renewals and expansions, while new lease transactions remained stable.
The high share of renewals (47%) and the relocations within the registered stock caused no increase in the average occupancy level while several tenants were forced to decrease their accommodation resulting in an increase of vacancy rate, reaching 19.8% in Q2 2010.
Big box stock reached a higher occupancy rate (81%) compared to city logistics, where only 68% of the total accommodation is let.
The 10 largest transactions this quarter represent 76% of all take-up. Leased space tends to be large with an average of 2,700 sqm per deal in logistics parks (big box) and 800 sqm in citylogistics. The total stock of the Budapest industrial market reached 1,769,500 sqm by the end of June. A new 10,220 sqm warehouse was delivered during this quarter in Prologis Park Budapest-Batta, which was entirely preleased by a logistics service provider in Q4 2009. A small unit was completed in Nagytétényi Ipari Park, a city logistics center south of Buda. As in H1 2010, new supply of modern industrial properties will remain low during the second half of 2010 as well. Waberer’s is developing a 18,000 sqm warehouse in BILK and Oriflame’s 17,000 sqm built-to-suit warehouse in Goodman’s Üllő Airport Logistics Centre will be delivered during the second half of the year.
A solid and prolonged economic growth is required in order to increase the new demand for industrial space, which can lower the vacancy rate. Based on the experiences gathered in the first half of the year, tenants’ activity is showing improvement. But with only two quarterly data, there is little background information to forecast new trends. Q3 take up figures will be essential to see whether these positive trends are confirmed or they are just a reflection of the economic volatility.
Note on the methodology BRF analyses modern industrial properties located in Budapest and Pest County, completed after 1995 for letting purposes, comprising a minimum of 2,000 sqm space in terms of citylogistics or minimum of 5,000 sqm space in terms of logistics park warehouses. The industrial stock excludes owner occupied buildings.
Members of the Budapest Research Forum include CB Richard Ellis, Cushman & Wakefield, DTZ, GVA Robertson, Jones Lang LaSalle and King Sturge. (press release)
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.