Budapest, 26th March 2009

Colliers International Budapest has issued its latest market report for the Industrial real estate market. “2008 was a record year in terms of total leased space. Despite the impending recession that started in October, 333 000 sqm was leased, which is an 82% increase versus 2007. Overall, the market is relatively stable, and demand and supply could remain in equilibrium in the first half of 2009, although negative trends such as longer decision-making processes on the tenant side also appeared.“- Tamás Beck, Head of Industrial division explained.

Developers were careful not to build too much speculative space, therefore only 250 000 sqm was delivered in 2008 (according to forecasts made at the beginning of 2007, delivery would have been 390 000 sqm). Vacancy rate reached 17% in the greater Budapest area at the end of December. “This figure may seem high, but one third of the vacant space is the result of the bankruptcy of logistics provider Rynart, leaving its distribution center buildings at Biatorbágy empty. Colliers is now actively working on leasing the largest building, WestLog DC. Large industrial tenants should nevertheless be careful to plan their location in advance because vast leasable areas are rare, and will be even more scarce throughout 2009. The significant decrease of new speculative developments, parallel to the continuous fill up of existing buildings could considerably reduce the vacancy rate for the second half of 2009,” – Tamás Beck added.

Cutting down on supply and “discount offer” leases can ensure that vacancy will remain under control in 2009. So far, the demand for warehouse space has been relatively stable, but long decision-making processes and the fact that tenants are remaining on the sidelines will lower the number of transactions in Q1 2009. At some locations, new “discount offers” have been set and shorter-period lease contract possibilities also appeared.
Non-discount asking rental fees should remain between 4 and 4.4 €/sqm/month for big box warehouses and 5 and 6 €/sqm/month for inner city logistic parks. “Temporarily it is impossible to make further predictions for the second half of the year, since it is difficult to assess the impact of the recession on the demand side” – said the Head of Industrial division at Colliers International, summarizing the perspectives for 2009.