The View 7th edition

INDUSTRIAL MARKET

48

GERGELY BAKA Director, Head of Industrial & Logistics

HIGHER COMPLETION VOLUME BUT ONLY SERVING PRECEDING DEMAND Following the marginal development activity of the post-crisis years, Greater Budapest has seen a moderate uptick of new industrial supply over the last three years. 2018 brought the highest new completion volume in a decade with 127,000 sq m of new space handed over, up by 8% y-o-y. However, in terms of absolute volume as well as the nature of the delivered supply, this must still be considered rather conservative in the current market environment. The majority of last year’s new supply came in H2, in the form of two development completions in the Budapest-South submarket. A new 5,000 sq m building in Budapest Dock Szabadkikötő was handed over in Q3 largely pre-let, with the remainder being successfully let to the same tenant by year end. The other completion was the purpose-built 91,800 sq m Auchan DC spread across two phases in Üllő Airport Logistics Center. Earlier, the first half of

the year saw the handover of a new 11,000 sq m building inEast Gate Business Park inBudapest- North, a 7,000 sq m building in Budapest Dock Szabadkikötő in Budapest-South and a 12,200 sq m warehouse built for Euronics in Inpark Páty in Budapest-West. At the end of 2018, the modern industrial stock in Greater Budapest stood at 2,177,900 sq m. Looking ahead, the pipeline for 2019 looks similarly conservative in terms of volume, albeit with signs of increased willingness to undertake speculative projects, which would mark a turning point in the development cycle. However, developers have been communicating this sentiment for some time now without actually following through – it is not uncommon for projects to kick off only to stall at the groundwork phase shortly thereafter. While such delay risks persist, currently a total of eight new industrial developments are considered likely to materialize in 2019 across Greater Budapest, with a combined volume of 116,200 sq m. All of these are located in the Budapest-South and -West submarkets, and six of them are big-box logistics schemes in established locations along the M0 ring road while the other two are extensions of city logistics parks within the city boundaries.

Total Stock (right)

Completions Pipeline - pre-leased Pipeline - available

sq m

0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Annual New Industrial Supply in Greater Budapest

Source: CBRE Research