The size of the modern industrial stock in Budapest

Members of the Budapest Research Forum including CB Richard Ellis, Colliers International, Cushman & Wakefield, DTZ, Eston International, GVA Robertson and Jones Lang LaSalle report their industrial market data covering Q3 2011.

The size of the modern industrial stock in Budapest and its surroundings stood at 1,797,347 at the end of Q3 2011. Similarly to the first half of 2011 no new development was handed over between July and September either.  The total volume of lease transactions reached 49,843 sq m in Q3 2011, which is the lowest quarterly level in 2011 so far. This level means a 26.4% decrease quarter on quarter and a 25.1% decrease on the same period of 2010. 

Q3 2011 Key Transactions

Building               TenantSize

(sq m)   Deal Type

BILK       confidential       7,500     Renewal

M1 Business Park            DHL        6,500     Renewal

ProLogis Park Budapest-Sziget  DHL        6,100     Renewal

BILK       confidential       4,000     Expansion

The share of renewals in lease transactions (56%) remained high amounting to 27,912 sq m. New leases accounted for 20 %, expansions for 18 % while preleases for 6 %. In total 26 industrial transactions were concluded in Q3 2011 out of which only three were signed above 5,000 sq m, all of them being renewals. The average transaction size in logistics parks reached 2,242 sq m. Demand for city-logistics was relatively high: 5,000 sq m was let in such schemes; the average deal size was 833 sq m in them, above its Q2 2011 level. Although there was no new completion in the quarter the vacancy rate increased again. The low level of demand could not absorb the amount of newly vacated spaces which came to the market as the result of moving outs and closures hence the current vacancy rate stands at 22.4 %. Occupancy in logistics parks is higher than in city-logistics, 78.3% and 70.8% respectively.

Q3 2011               Logistics Park     City logistics       Total

Completions (sq m)       0             0             0

Stock (sq m)      1,627,044            170,303                1,797,347

Vacant space (sq m)      353,502                49,770   403,272

Vacancy rate (%)             21.7%    29.2%    22.4%

Lease transactions (sq m)           44,845   4,998     49,843

New (sq m)        9,276     789         10,065

Renewal (sq m)               27,283   629         27,912

Expansion (sq m)            8,286     430         8,716

Prelease (sq m)               0             3,150     3,150

Net absorption (sq m)  -6,379   -5,754   -12,123

The level of net absorption became negative again in Q3 2011 (-12,123 sq m). New leases and expansions were signed on 18,800 sq m but additional warehouse spaces became empty after their tenants decided to leave on 31,000 sq m.

Note on the methodology:

BRF analyses modern industrial properties located in Budapest and Pest County, completed after 1995 for letting purposes, comprising a minimum of 2,000 sq m space in terms of city-logistics or minimum of 5,000 sq m space in terms of logistics park warehouses. The industrial stock excludes owner occupied buildings.