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Industrious industrial parks

25 Jan 2007 - BBJ

The industrial real estate market can be referred to as pleasantly stable, for it does not react sensitively to market swings over the short term; violent changes and realignments are not typical.

Andrea Pusztai, leading consultant of Colliers International Hungary, explains the reasons behind this and speaks about the expected tendencies in 2007. „Just like the investment real estate market, here again we are speaking about a low supply of the product of suitable development land. It can be observed that besides the traditional view of having Budapest as the center, the demand for regional sites is rising among manufacturing and assembly plants.

The new road developments, motorway construction, and the handover of new sections of the M0 ring around the city have brought plots, which have been less valuable until now, to the attention of investors.” The rate of expansion within industrial parks has somewhat decreased compared to the statistics of the previous two years; the buildings built-to-suit clients’ individual requirements remain few. It is primarily speculative developments and subsequent leases which dominate the market.

Assessing the year 2006, a major highlight is the increasing demand of tenants for newly-built logistics and manufacturing halls, a tendency which is likely to characterize the year 2007 as well. Since the vacancy rates of existing facilities will decrease, it will be new developments, brown- and green field projects, which give momentum to the market. We must mention, however, that with such ventures, the ownership structures and possible environmental and other regulatory issues often pose serious challenges to the developers.

Well located plots within Budapest have appreciated extremely. Since the clear areas immediately available for construction are few in the capital city, here again it is the brown field developments which present the opportunities. Evaluating the current supply, we can determine two major sections within the Budapest region, as regards industrial real estate, namely, the dedicated logistics bases in the distinctive districts within city limits, and plots along the motorways just outside Budapest. The most popular districts within the city are for example 4, 9, 10, 15, 20, 23, 3, 11, and 22.

Outside the capital city it is the areas along the main motorways (for example Budaörs, Törökbálint, Biatorbágy, Páty, up till Herceghalom; and heading south and east: Szigetszentmiklós, Dunaharaszti, Gyál, Vecsés) as well as the plots in the direct vicinity of Ferihegy Airport, which are especially sought after. The developments along the M3 motorway (Dunakeszi, Fót, etc.) must also be mentioned, which are set to be more valuable with the completion of relevant sections of the new M0 ring. The importance of the motorways, the M0 ring, and Danube bridges is well illustrated by the fact that the Pilis Hills, and Szentendre to the north – in spite of their proximity to Budapest – because of difficult road access, have not been successful in attracting the attention of developers until now.

Pusztai pointed out that although demand in the Hungarian market has been low, compared to neighboring countries, the year 2006 has been especially active for Colliers. „Concerning the main players in the logistics market, we are not expecting the appearance of a major new developer in the near future, for it would be quite difficult to successfully compete with the existing developers on the market, as they themselves are struggling with a low supply, continually looking for adequate new areas for their new projects,” said the leading expert in summary.

Source: bbj.hu

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