Demand for domestic industrial space is growing. The drivers are retail and manufacturing companies

The Czech industrial space market grew significantly year-on-year in the first months of this year. Specifically, the volume of new leases was 89.58% higher year-on-year compared to Q1 2024. Interest was more or less even across sectors. However, the estimates for this year are slightly behind the performance in 2021-2022, when the markets were mainly stimulated by e-commerce and related services. This is mainly due to the uncertainty associated with global trade developments and the generally tense geopolitical situation. As the latest data from real estate consultancy 108 REAL ESTATE shows, the promising performance of the domestic industrial real estate market is mainly driven by e-commerce and the still strong manufacturing sector.

Net demand reached approximately 170,000 sqm, including renegotiations it was over 480,000 sqm. In terms of new leases, companies from the wholesale / e-commerce sector, with Rohlík.cz dominating, leased 59,000 sqm, followed by logistics (50,000 sqm) and manufacturing companies (49,000 sqm). The automotive sector hits the statistics mainly in the second half of the year - several tenders are active, for example for tyre storage and suppliers in the retail and wholesale sector.

"The results for the first quarter do not confirm the gloomy prospects we are seeing in the media. Industrial market activity is stable, and we are even seeing a noticeable recovery in some sectors. The fear of the impact of the tariff war is evident. Nevertheless, developers and major players in the logistics services market are preparing for economic growth in the years ahead."

Jakub Holec, CEO of 108 REAL ESTATE, comments on the quarterly results. According to him, this is also the reason why speculative construction has been slowing down in recent months, but at the same time the preparation of several giant projects with completion after 2027 has started - for example Panattoni Smart Park Karviná, where 330,000 sqm of leasable area is to be built at a cost of around CZK 25 billion.

After a period when the supply of new, completed space was coming into balance with the realized demand, the first quarter brought a turnaround. 146,653 m2 of new industrial space was approved and already had a tenant. Due to the number of buildings in shell and core condition that are still waiting for their users, the disproportion was not reflected in the vacancy rate, which reached 3.8%, and 7.3% when including shell and core space. However, higher tenant activity was reflected in a slight increase in rents, which rose slightly to an average of EUR 5.91/m2/month at the beginning of this year. The highest rent achieved was EUR 7.85/m2/month.

New leases were dominated by Rohlík.cz in three significant transactions: 17,669 sqm in CTPark Brno Líšeň, 17,239 sqm in CTPark Prague East and just under 6,000 sqm in CTPark Ostrava-Poruba. In the logistics segment, the largest transactions were concluded by an unnamed company (15,098 sqm in P3 Park Lovosice) and HAVI Logistics s.r.o. (8,866 sqm in Panattoni Business Park Kladno). The demand for production space is consistently high. Among the concluded leases, 15,098 sqm for Prosperplast s.r.o. in CTPark Tošanovice and 10,205 sqm for the metal manufacturing company EXCON, a.s. in Industrial Park Újezdeček stand out.

"Several giant transactions impacted the market last year. The start of this year shows that there is also high activity in medium and smaller leases. This is an important underpinning for the whole market - it is the basis for steady future growth. However, the optimism is tempered by the fact that a number of subleases are re-emerging, demonstrating that some companies have in the past pre-stocked space that they are not yet using,"

Matěj Indra, Head of Industrial Agency at 108 REAL ESTATE. Subleases, often short-term, are mainly related to logistics companies whose clients are reducing their capacities in the long term.

There are over 1.6 million sqm of industrial space under construction or in shell and core condition on the domestic market. This is a substantial stock for the coming years, with new developments continuing to come on stream. They are concentrated mainly in the Moravian-Silesian region, where the activity of developers is supported by transformational subsidy titles. After the Pilsen region, which has cooled down mainly due to the connection to the stagnant German market, it is therefore Ostrava and its surroundings where there is a more noticeable excess of supply over demand.

Developers are therefore focusing on the preparation and construction of future capacities. They are phasing their plans judiciously and are flexible in terms of implementation dates and incentives for those interested in leasing.

"We are seeing more plans tied to clusters or collaborations with universities or large manufacturing firms. That spreads the risk but doesn't fully address the capacity of giant projects. In the Moravian-Silesian region in particular, it is necessary to proceed with the utmost caution, also in view of the strong competition from the Polish market, to avoid a sharp increase in industrial space without tenants. We certainly perceive the risk of greater pressure on rents here, and it also concerns several completed complexes,"

concludes Michal Bílý, chief analyst at 108 REAL ESTATE.