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Annual New Industrial Supply and Forecast in Greater Budapest

Source: BRF, CBRE Research

In contrast to this buoyant pre-lease activity, therewere only six new leases in the existing stock and these were significantly smaller, adding up to a combined 13,900 sq m. Finally, there were four expansion agreements to a total volume of 9,000 sq m to round out take-up during the period. As usual, new demand came mainly from distribution and logistics functions related to consumer goods that benefit from end market proximity, while production facilities remain in the regional markets. The demand balance clearly tilted back in favour of renewals, following the unexpectedly high take-up ratio in H1 considering the limited availability on the market. In H2 renewals totalled 163,100 sq m, more than doubling y/y and boosting total leasing activity to 243,100 sq m (+13% y/y).

On an annual basis, 2019 sawdemand improve from the lacklustre activity in 2018, yet the concentration into pre-leases and renewals points to the continued strain caused by the lack of availability. Annual take- up ended up at 203,700 sq m (+19% y/y) while total leasing activity amounted to 433,800 sq m (+15% y/y). AVAILABILITY CONFINED TO NEW DEVELOPMENTS Despite the tepid new demand in H2 2019, net absorption ended up at a relatively strong 45,800 sq m, slightly exceeding the new supply volume. Most of the absorption was a result of the near-full occupancy ratios in the newly supply, as the existing stock has no room left for substantial new demand. Due to this reason, absorption did indeed fall by 61% y/y as vacancy tightened and the period saw significantly less new supply.

Industrial Headline Rents in Greater Budapest

Source: CBRE Research