The View 7th edition

50

Central-Hungary

West-Hungary

sq m

East-Hungary

0

2005

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2015

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2018

F 2019

Annual New Industrial Supply in Hungary

Source: CBRE Research

VACANCY AT NEW RECORD LOW WHILE RENTS CONTINUE TO RISE Despite the limited demand volume, last year’s net absorption ended up strong. The second half of the year saw 118,700 sq m of industrial space absorbed across Greater Budapest, nearly all of which occurred in Q4. This was predominantly driven by the completion of the new Auchan DC, which arrived to the market practically fully occupied. Total net absorption in 2018 amounted to 153,400 sq m (-21% y-o-y), clearly more than the new supply volume. Hence, the average vacancy rate dropped to 2.4% (-1.6pp y-o-y) by Q4 2018, marking a new record low level.

All three submarkets posted lower average vacancy rates than a year earlier and Budapest-West became the most saturated submarket for the first time since 2010, reaching average vacancy of 2.0% (-3.9pp y-o-y). Budapest-North also saw significant vacancy decline to 4.1% (- 2.6pp y-o-y), while Budapest-South hovered throughout the year and ended up marginally lower at 2.3% (-0.2pp y-o-y). Headline rents across the Greater Budapest region continued to rise throughout 2018. Existing big-box warehouses are typically priced between EUR 4.00-4.50 / sq m / month, while speculative new developments are planned between EUR 4.40-4.80. Build-to-suit schemes are priced even higher, in the range of EUR 4.50-5.00 depending on specification and location. The segment with the highest rents remains the limited city-logistics stock within the city boundaries, where quotes are typically between EUR 4.75-5.50.

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Renewals

Other Take-up* Pre-leases Share of Pre-leases from Take-up

sq m

0% 5%

2013 2014 2015 2016 2017 2018

Split of Total Industrial Demand in Greater Budapest

Source: CBRE Research