Boom in Budapest Industrial and Logistics Market


Airport City logistics center by CPI.

The boom in the logistics and industrial sector is continuing unabated, as demand remains high and vacancy stands at a record low. Analysts see the market in Hungary and Central Europe as being in a favorable post-coronavirus position given the growth in e-commerce and light industrial production in major regional hubs, albeit with significant geopolitical and economic concerns.

In the current high demand, low vacancy climate, most developers are constructing built-to-suit facilities with an additional speculative element. Others, however, are prepared to build “on spec,” seeing little current risk in the strategy.

Established regional industrial/logistical developers and park operators, such as Prologis, CTP, and VGP, are active in the market, alongside national operators such as Infopark, the National Industrial Park Operator and Developer (NIPÜF), Wing, HelloParks and ConvergenCE.

Most recently, the leading regional developer and park operator Panattoni joined this increasingly active market sector. This reflects the view that the logistics sector has undergone structural changes concerning demand and the need for more efficient delivery systems. Development activity is also extending to regional logistics hubs outside the M0 motorway and the Greater Budapest area, as has long been the development model elsewhere in Central Europe.

Industrial demand for 2021 reached around 630,000 sqm, representing a 15% increase on the previous year and a vacancy rate of about 4%, according to Cushman & Wakefield. Further, 2021 was a record year with net absorption of 320,000 sqm. In all, 13 new industrial buildings were delivered to the Greater Budapest market last year.

The consultancy has traced 340,000 of space planned for delivery in 2022 in Greater Budapest, with a further 88,000 sqm already scheduled for 2023.

“Both the significant amount of new supply arriving to the market and the high proportion of pre-lease transactions in the take-up demonstrate the continued developer and tenant appeal of the market,” said Cushman.

Small Stock

The total modern industrial/logistics stock in the Budapest area stands at about 2.8 million sqm, according to the Budapest Research Forum (consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary). This is a relatively small stock by Central European standards. There are few, if any, existing logistics buildings with more than 5,000 sqm of available contiguous industrial space and an overall vacancy rate of around 4%.

The consultancy has traced around 1.3 million sqm of stock in the Hungarian regions, resulting in a total country-wide industrial stock of 4.12 million sqm. Leasing activity has further accelerated, demonstrating the continuing positive market sentiment. Although Hungary is seeing growth in its seven regions, 57% of 2021 completions were in Central Hungary (which comprises Budapest and the surrounding Pest County), according to CBRE.

HelloParks, a member of the Hungarian Futureal Group, is developing its eponymously-named logistics network across Hungary (and possibly further afield into the CEE region in time). HelloParks Maglód is under construction on a 46-hectare site located near Budapest. The EUR 40 million industrial and logistics center has the capacity for a total area of 193,000 sqm of BREEAM-accredited space.

“When we entered the market in 2000, Hungary was not competitive in terms of pricing. In general, the market was very different from what we see today. When we started to develop our first buildings, we realized that demand for space was much bigger than we had anticipated,” comments Rudolf Nemes, managing director of the company.

“For example, with our Fót 1 project, nobody really believed in this area to the north of Budapest, and the net take-up was low. I think the game changer in this market segment was the improvement in the north of Hungary and the establishment of the Samsung SDI factory. Most of our tenants are suppliers to SDI,” he explains.

“There was so much demand that we could increase rental levels, and now we are at EUR 5.2 per sqm per month headline rent levels. I think this is the prime in Hungary. In the eastern region, at Maglód, our first 45,000 sqm storage building handed over this year is almost fully occupied. We have started construction of a second, 45,000 sqm building and already have pre-leases. In general, when we hand over a building, we have 50% occupancy and within six months lease the remaining space,” Nemes adds.

Low Supply

The industrial sector sees investors battling over a low supply of assets. In a recent logistics transaction, the developer and investor Wing purchased the Airport City Logistics Park, located in the neighborhood of Budapest Liszt Ferenc International Airport, from CPI. The business park contains almost 44,000 sqm of warehouse buildings and 8,0000 sqm of offices in six functioning buildings, with one other under construction.

Regional industrial park developers and operators are the biggest owners of industrial stock in Hungary. With its new Prologis Sziget II development, Prologis has a pipeline of 50,000 sqm of space in Hungary for the year. With Hungary regarded as lacking a robust secondary industrial market in the regions, the developer is concentrating its development strategy in the M0 area around Greater Budapest.

The company has a 630,000 sqm portfolio in Hungary. Prologis is developing around 80% of its space on a BTS basis, with the remaining 20% speculative. Over the past year, this speculative space has let very quickly. In general, projects have a delivery time of 10-12 months from permitting to completion, according to Zsuzsanna Hunyadi, director of leasing and customer experience at Prologis Hungary.

The leading European and CEE industrial park operator and developer Panattoni has secured two 100,000 sqm sites in the Budapest area. It had been a notable absence in the Hungarian market in recent years. The company has undertaken construction of its first 17,300 sqm warehouse at Törökbálint. Panattoni Park Budapest West is due to be completed in the first quarter of 2023.

This article was first published in the Budapest Business Journal print issue of July 29, 2022.

Ministry Dismisses Suggestion That Hungary is 'Poorest' EU S... Figures

Ministry Dismisses Suggestion That Hungary is 'Poorest' EU S...

Economic Cooperation 'Firm Foundation' for German-Hungarian ... Int’l Relations

Economic Cooperation 'Firm Foundation' for German-Hungarian ...

Summer Season in Full Swing at Budapest Airport Transport

Summer Season in Full Swing at Budapest Airport

Sziget Tops Slingo Music Festival Ranking In Budapest

Sziget Tops Slingo Music Festival Ranking


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.