The View 7th edition

49

Demand for industrial space across Greater Budapest fell back significantly in 2018, coming down from the record high level of the preceding year. In H2, total leasing activity amounted to 214,400 sq m (-35% y-o-y), improving from the first half of the year but still rather weak in annualized comparison. Seven of the ten largest lease transactions registered during the period were renewals. Take-up showed a similar trend, nearly doubling from the first half but weakening from the corresponding period a year earlier, to 111,100 sq m (-36% y-o-y). Two pre-leases contributed to the volume in H2; one by Media Markt for 18,800 sq m in a new building in BILK and the other by Englmayer for 7,000 sq m in a new warehouse in CTPark West. In addition, there were a handful of new leases and expansions in the range of 3,000-7,000 sq m, predominantly signed by 3PL providers.

In total during 2018, total leasing activity amounted to 378,000 sq m (-39% y-o-y) while take-up amounted to 171,300 sq m (-37% y-o-y) – both the weakest figures in three years. This was mainly due to the lack of very large transactions, such as Auchan’s pre-lease for its new distribution centre and Waberer’s lease renewal in BILK in 2017. Furthermore, the low demand volume and the dominance of renewals is a reflection of the continuing saturation on the market. In terms of the split of functions within the annual take-up, logistics functions reclaimed the dominant spot with 37% of the total volume, followed by distribution facilities with 30% and light production activity with just 6%. Unfortunately, there was an unusually high number of undisclosed tenants amongst small to mid-size deals, resulting in 28% of take-up being unaccounted for.

City Logistics

Built-to-suit

Speculative new

Second- hand

3,5 4,0

4,5

5,0

5,5

6,0

€ / sq m / month

Industrial Headline Rents in Greater Budapest

Source: CBRE Research