The industrial and logistics sector in Budapest is experiencing significant growth, with high demand, record-low vacancy rates, and burgeoning interest from developers. The Greater Budapest area, in particular, stands in an advantageous position due to the escalating demand for logistics, e-commerce, and light industrial spaces.

Previously, developers were more drawn towards fields such as office spaces or hotels, but the industrial and logistics market is quickly becoming a preferred sector for investment. This shift is accompanied by increasing sophistication in tenant requirements and a rising demand for sustainability-accredited infrastructure.

However, the sector faces hurdles like escalating development costs, workforce shortage, and increasing rents, notes Cushman & Wakefield, a renowned consultancy. As of the first quarter of 2023, Hungary's total industrial stock has grown to 4.7 million square meters, with the Greater Budapest area contributing to 3.2 million square meters, reports CBRE.

As the logistics market continues to grow rapidly, the Greater Budapest area is projected to complete 446,000 square meters this year, as stated by CBRE. Despite the robust supply, vacancy rates have slightly increased to 6%. Regional industrial developer and operator, CTP, has initiated a 120,000 square meter project at CTPark Szigetszentmiklós and has over 200,000 square meters of space under construction in Hungary.

Logistics space under construction across Hungary is over 600,000 square meters, as estimated by Cushman & Wakefield, with 30% already pre-let. Gábor Halász-Csatári, head of industrial agency at Cushman & Wakefield, mentions several leading developers, including Prologis, CTP, Hello Parks, VGP, Wing, and Biggeorge/Logstar.

In the view of Prologis, Hungary lacks a robust secondary industrial market in its provincial cities, leading to their focus on the area surrounding the capital. The Budapest area caters to a speculative-led stock, while developers in the countryside tend to prefer BTS (Build to Suit) projects, owing to the higher investment risks involved.

Panattoni, a leading European industrial park operator and developer, recently secured two 100,000 square meter sites in the Budapest area, marking its return to the Hungarian market.

Furthermore, the demand for temporary, or "buffer" spaces is on the rise in Budapest, which can be met through sub-leases or third-party logistics (3PL) services.

In alignment with the rising trend of sustainability, Panattoni plans to incorporate energy-efficient solutions, such as solar panels, electric vehicle charging facilities, and heat pump systems, into their products. Similarly, other firms like CTP and Prologis are committed to developing sustainability-accredited buildings across their Central European logistics portfolios.

HelloParks, a member of the Futureal Group and one of the most active developers in Hungary, is also pursuing sustainability with the first Breeam "Outstanding" accredited logistics building in Hungary.