by Ákos Budai | Industrial

Renewals dominated the Budapest industrial property market in the second three months of the year where the vacancy rate has increased for the first time in nearly three years. The Budapest Research Forum has published its Q2 2016 industrial market snapshot.

 


In the second quarter of 2016 no new developments were completed, hence the Budapest agglomeration’s modern industrial stock remains unchanged at 1,887,800 sqm.  
 
Total leasing activity amounted to 92,100 sqm in Q2 2016, which marks a 22% decrease on the previous quarter and a 13% decline on a yearly basis. Similarly to previous quarters, most of the demand was generated by renewals with 65% of TLA, while new leases made up only 3% and expansions 13%. Due to limited available space several large pre-leases were signed during the quarter, totalling 17,650 sqm and thereby representing 19% of the total demand for the period. 

The second quarter saw 21 industrial transactions in total, out of which two exceeded 10,000 sqm – these were all lease renewals. The average deal size was 4,380 sqm, unchanged from the previous quarter but 18% above the quarterly average of the last three years. 
 
Approximately 93% of the leasing activity was recorded in logistics parks where the average deal size was 5,710 sqm. The average deal size in city logistics schemes equated to 1,080 sqm.

The largest lease was signed in ProLogis Park Budapest Harbor Park, where a logistics company renewed on 20,860 sqm. The two largest pre-leases were both signed in Budapest Dock Szabadkikötő on a total area of 12,800 sqm. The largest new standard lease was a 2,000 sqm deal in the Gentraco warehouse, while the largest expansion took place in BILK with Transoflex’s leasing.
 
The vacancy rate currently stands at 9.7%, which is 1.1 pps above the level of Q1 2016 and thereby marks the first quarterly increase since Q3 2013. Currently there is 182,650 sqm vacant space, with only four schemes offering available areas larger than 10,000 sqm. 

Net absorption came out negative, totalling 20,640 sqm, which marks the volume by which the leased part of the industrial stock contracted during Q2 2016. 
 
The Budapest Research Forum (BRF) comprises of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary. BRF analyses modern industrial properties located in Budapest and Pest County, completed after 1995 for letting purposes, comprising a minimum of 2,000 sqm space in terms of city-logistics or minimum of 5,000 sqm space in terms of logistics park warehouses. The industrial stock excludes owner occupied buildings.