The View 9

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*Other Take-up includes new leases and expansions within the existing stock

Split of Total Industrial Demand in Greater Budapest

Source: BRF, CBRE Research

OUTLOOK New supply in the Greater Budapest region looks set to increase in 2020, although there is a risk that developments will be delayed. The long-awaited breakthrough of developer-led BTS or speculative supply in the countryside seems to drag out further. New demand in Greater Budapest is increasingly forced to commit to pre-leases in the pipeline, as immediate warehouse availability converges to zero. While the pre-lease ratio in the ongoing pipeline looks modest for now, the developers that are active possess a wide existing client network and are likely to secure leases along the way.

A significant change in vacancy is not expected, as developments without a significant commitment tend to suspend activity until a tenant is secured instead of being completed vacant. The relative vacancy rate could compress further as occupied stock arrives to the market. Rents are likely fully priced for now and the potential driver of value is successfully transferring existing tenants or securing new demand at these elevated levels. The cost pressure is likely to ease on the mid-term as construction capacity gets freed up from other sectors.