According to the latest DTZ Industrial Market Update which examines the first half of 2009, industrial development activity was notably high during this period and even exceeded the whole year figures of some previous years. 123,000 m2 of industrial space was delivered to the market raising the modern industrial stock to 1.54 million m2.
It is important to mention that most of the delivered schemes were already in the construction phase when the crisis emerged last October. However, a majority of the planned schemes were put on hold, which will result in minimal completion level in the second half of 2009.
The Southern part of Budapest and its surroundings continued to raise its market weight with 68% of the newly completed developments located in this area. The two largest developments in this area are Viktória Industrial Park and M5 Gyál Business Park containing 45,000 m2 and 35,000 m2 lettable space respectively.
Weak demand and a large scale of new developments during the first half year, of which only 14% has been leased, have increased the vacancy to 22.8%, the highest level in the past five years. The share of fully occupied developments decreased from 30% to 16%.
Headline rental levels decreased between 10-20% and range from 3.5 to 5.0 per m2 per month. City logistics headline rents remained the highest achieving 5.0 to 6.0 per m2 per month. DTZ also points out that in addition to falling rental levels, increased incentives such as rent-free periods and better fit-out contributions, indicates the sharpening competition.
'The industrial real estate market has reacted promptly to the changes in the economic climate with the majority of the planned speculative developments having been put on hold. Beside the low level of handovers predicted for the second half of the year, the vacancy level will remain above 20% in the next 12 montshs if no larger deals happen. The developers are concentrating on their current schemes, striving to reach the largest occupancy possible and to secure new tenants with different incentives. The developers which can best adapt to tenant demand and offer the most flexible rental conditions will be successful,' added Éva Tamás, property adviser of DTZ.