According to portfolio.hu, Hungary’s industrial real estate market reached a 5.5% vacancy rate in the first half of 2017, which is a record-breakingly low rate since the measurements introduced by the Negotiating Forum of Budapest Estate Advisors.
Out of the 1.95 million m2 modern logistic property stock, currently an area worth less than 73 thousand m2 is empty in Budapest and its agglomeration, and only four “A” category buildings have a contiguous stock area bigger than five thousand m2.
According to Tamás Beck, the director of Colliers International’s industrial property department, the limited supply is the result of the area absorption of the past years and the many speculative developments. Due to the shortage of labour in the building industry, the cost of the work force has increased, thus the cost of construction as well. This is why construction works can last for more than eight months in the case of significant projects.
Moreover, there’s a shortage of the so called “plug and play”, in other words, well-prepared development areas, where constructions could start right away. Currently, the net rent guide prices in the case of big-box logistics are between 3.6-3.9 euro/month/m2, while this is 4.5-5.5 euro in the case of city logistics.
The boost of development activity is best shown by the fact that between the second half of 2016 and the first half of 2017, five projects were inaugurated with a lessor area of 50 thousand m2. The inauguration of the same amount of area can be expected until the end of the year (Inpark Páty, East Gate Business Park, and Budapest Dock Free Port). But these buildings will mostly be realised in the frameworks of pre-emptive business, so they won’t be listed as available empty properties in the supply.
The market’s general flourishment is indicated by the data, according to which new leases, expansions, and pre-emptive contracts were the determining elements of tenemental transactions in the first half of 2017. However, due to the small number of new developments, the renewal of already existing leases dominated the market.