The cheapest modern industrial space can be rented by companies in Warsaw and Istanbul, with an average price of €3.5 per square meter in both capitals. In Bratislava, companies pay €4 per square meter per month, €5 in Prague and €7 in Berlin. Of all European cities, the most expensive is London with almost €15 euros per square meter. The second most expensive European city is Oslo, where local industrial companies pay €10.2 per square meter per month. However, the values are calculated on a prime basis, which is the average basic rent (without incentives) of the 5% of the highest price leases in each sub-market, and may not correspond to the actual price of transactions.
“From the price comparison of rentals we still see the potential for rent growth in the Czech Republic. Compared to the cities west of us, domestic prices are rather below average and we expect gradual balancing in the future. The Czech Republic is important for its location close to Germany and it has relatively good infrastructure,” says Jakub Holec, managing director of 108 AGENCY.
In the European logistics market, rents are expected to increase in 14 cities, including London, Lisbon, Warsaw and Brno. Rents should remain at roughly the same level in Berlin, among others. Only Istanbul is expected to decline.
Logistics and industrial premises in the Czech Republic
Prague belongs to the most expensive regions in the Czech Republic. On the other hand, the cheapest is the Ústí nad Labem Region, with a rental price of €4 per square meter per month. The most expensive locations include the Zlín Region, with a rent exceeding €5 per square meter. It can be assumed that in the future more rentals will occur in Brno or Ostrava due to limited supply in popular locations such as Prague or Pilsen. For example, the Ostrava Airport Multimodal Park with a total area of 52 hectares is currently being built in Ostrava. 234 thousand square meters of space is expected after completion of the construction.
“Although this is not a popular thing to say, the truth is that industrial developers make a significant contribution to low unemployment. In recent years, the Czech Republic has attracted hundreds of investors who have created tens of thousands of jobs. Our long-term goal is to raise public awareness and thus avoid the prejudice that 'warehouses are evil'. We want to talk about topics that are not widely known today because there is no education in this area. It should be noted that halls and warehouses are an integral part of public infrastructure, even in cities. Without them, there would be no supermarket offer as we know it, the e-shops from which customers expect a quick delivery could not grow, and cities would not be able to offer enough jobs,” says Jakub Holec.
The domestic economy, which is closely related to the price of industrial premises, grew by 3% in 2018. At present, the vacancy rate of industrial premises is around 4.3%, i.e. from the roughly 8.1 million m2 of modern industrial areas in the Czech Republic, about 350,000 m2 are immediately available. Further construction can be expected in the future, especially in established locations. However, due to labor shortages, previously unexplored areas will be more exploited. In Prague, the real estate market has been growing for the past five years and the demand is steadily rising.
The construction of new logistics parks and industrial buildings is influenced by many factors and is often a lengthy process. “In the Czech Republic, we are currently struggling with low motivation of municipalities for industrial construction, lack of conception in brownfield revitalization, bureaucratic burden on investors, and lack of human resources caused by low unemployment. Although we are confronted with limiting factors, we believe that the future of industrial properties in the Czech Republic will be positive,“ adds Jakub Holec.