Developer activity declined within that period, with 46,000 sqm of speculative space delivered in the first six months, the one built-to-suit (BTS) investment was not yet completed by the end of the period. As a result, the overall stock of industrial space built for lease rose to 1.6 million sqm, of which 1.13 million sqm (71%) were speculative developments. In the second half, Colliers International expects a similar delivery figure, bringing the annual total to some 80,000 sqm, or around half of what was handed over in 2009.

Compared to the extremely low take-up figure (26,000 sqm) of the first half of 2009, 70,000 sqm of new lease agreements were signed in the first six months of this year. This figure includes 20,000 sqm (29%) of expansions. However, as opposed to earlier years, when logistics firms accounted for 40–50% of take-up, the majority of contracts in H1 involved end-user companies. There were also a high number of renegotiations and extended leases.

„The pipeline for H2 also looks promising, with similar take-up forecast, which would bring the full-year figure to around 140,000 sqm, or the same as last year.” – forecasted Tamás Beck.

Absorption and vacancy

As there was also a certain amount of industrial space going vacant in the period, the take-up of the first half was enough to bring net absorption to only a slightly positive territory, at 12,500 sqm, which compares to the 55,000 sqm figure for 2009 overall.

This also means that overall vacancy on the market remained stagnant, coming in at 21.3%, virtually identical to 21.2% at the end of last year. Within this, vacancy at speculative buildings moved up slightly from 23% to 24.7%, while the figure dropped from 17% to 13.1% for BTS investments (due in large part to the increased utilization of the former Rynart portfolio).

The amount of empty space is still strewn across Budapest and its vicinity. While it is relatively easy to find 1,000–4,000 sqm of leasable space, there are only seven locations where more than 10,000 sqm of continuous space are available, and three or four where more than 20,000 sqm can be leased.

Rental levels stagnated in the first half as well, as headline rents for big box buildings remaining in the €3.2–3.8/sqm/pcm range, while the rate at city logistics buildings is around €5/sqm/pcm.

There were no substantial land or building purchase transactions during the first half, although certain groups of buyers have returned to the market, mostly looking for properties for own use (production, brand service). Interest however is mostly focused on smaller buildings or land plots, with larger facilities and plots not sought at all.

„As for the rest of the year 2010, Colliers International expects a similar overall picture as seen during the first half. No significant improvement in market trends is foreseen, with the next half-year (as well as likely the one after that) continuing to be characterized by stabilization and market balance at current levels. Further lease transactions will definitely take place, and a few developers have indicated that they could most likely commence certain developments in the second half, even on a speculative basis.” – summarized Tamás Beck, director of industrial sales & leasing at Colliers International.

You can read the complete Colliers International 2010 Mid-Year Industrial Report by visiting the following link:

http://www.colliers.hu/content/view/60/57/lang,en/

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Source: OGH