Greater Budapest: Growing Industrial Real Estate Stock

The total modern industrial stock in Hungary was 4,729,935 sqm at the end of Q1 this year. The stock in Greater Budapest reached 3,241,150 sqm, while a further 1,488,785 sqm of industrial space is located in Regional Hungary. Due to the annual size revision, the stock grew by 5,815 sqm, additionally three previously not registered industrial schemes were included in the stock in Q1 2023.

These data have been set out by the Budapest Research Forum (BRF, which comprises: CBRE, Colliers, Cushman & Wakefield, ESTON International, JLL and Robertson Hungary) in its Q1 2023 industrial market snapshot.

In this period, the Greater Budapest speculative stock increased by five buildings, totaling 111,330 sqm, while in Regional Hungary, four new buildings were handed over, totaling 45,835 sqm. In the former, the largest new delivery was with 46,275 sqm of space, while the largest new delivery in Regional Hungary was in Miskolc adding a new scheme of 20,000 sqm to the regional stock.

The vacancy rate at the end of Q1 2023 was 5.9% in Greater Budapest, an increase of 210 basis points quarter-on-quarter and an increase of 170 basis points year-on-year. At the end of the quarter, a total of 190,680 sqm of logistics space was vacant in Greater Budapest, while vacant areas outside Budapest reached 94,825 sqm, corresponding to a vacancy rate of 6.4%. On national level the vacancy rate stands at 6%.

Total demand in Greater Budapest amounted to 107,025 sqm in Q1 2023, indicating a decrease of 15% year-on-year. In Q1, take-up excluding renewals reached 58,000 sqm, showing a decrease of 43% compared to the same period of last year. The largest transaction outside Budapest was a pre-lease agreement of 25,000 sqm at VGP Park Győr Beta, while in Greater Budapest the largest lease agreement was a lease renewal for 23,000 sqm at Prologis Park - Gyál. Renewals accounted for 45% of gross take-up, which was followed by expansions with a share of 22%. Pre-leases accounted for 17% of gross take-up, while new leases accounted for 16%.

In the first quarter of 2023, 25 leasing transactions were registered in Greater Budapest, with an average transaction size of 4,280 sqm – three of them for more than 10,000 sqm. The majority of leases continued to be concluded in big-box logistics parks, while in city-logistics parks eight agreements has been registered with an average size of 1,35 sqm.

In Q1, the net absorption of Greater Budapest with respect of size correction has remained positive and reached 40,790 sqm.