Organo Ltd. to Develop the First Self-Storage Facility in Budapest, Hungary’s District XIII

Commercial real estate developer Organo Ltd. is developing a self-storage facility in Budapest, Hungary, the very first in District XIII. The company is converting a 30,000-square-foot warehouse it has owned there since 1997, according to a press release. As the country’s capital, the city has 23 total districts, each with its own municipal government.

“The market opportunity presented by self-storage was very compelling, and the more we looked at the sector and compared the market in Hungary to more developed markets, the more we liked what we saw,” said Grant Boyd-Gibbins, chief executive at Organo parent company Sundance Group. “When we realized that the operators already active in the market were achieving occupancy rates of over 85% at rents equivalent to prime office space, we decided we had to act.”

The Organo self-storage project will be built in two phases. The layout and unit-size mix for the second will be based on demand following the initial opening.

“The [13th] District has a population of 130,000 and represents the most densely populated district outside Budapest’s world-heritage-status city center. It is an ideal location for self-storage, and yet there are none,” Boyd-Gibbins said. “There is also a corridor of modern office buildings, which stretches right through the district, and we hope this will lead to us acquiring business tenants with document-storage needs.”

There is one self-storage company in Hungary that operates 11 locations, mainly in Budapest, and a few other independently owned facilities. Funding is a challenge for local developers and investors, Boyd-Gibbins said.

“The banks here have no experience with financing self-storage, and we still require funding to complete the project; but we are continuing with the upgrading works on account of the confidence we have developed in the self-storage sector,” Boyd-Gibbons said, adding that the company has several interested investors. “We need to raise $450,000, and the building is mortgage- and debt-free and was valued recently at $2.5 million, roughly five times the funding needed; so, we hope we can solve it.”

Sundance is a development and real estate firm headed by Boyd-Gibbins, an English expat real estate developer who’s worked in Budapest since 1995. The company primarily redevelops existing owned assets into new projects.