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The first quarter tested the resilience of the Czech industrial space market - tenants dictate conditions

The first three months on the domestic industrial space market have been tenant-driven, after the last few years, when there was a virtual lack of availability of modern warehouse and production space. In the first quarter of this year, the supply of subleases accelerated significantly: data from real estate consultancy 108 REAL ESTATE show that new contracts from January to March covered just under 92,000 sqm, a record low. However, some of the tenants rented space under subleases, which are not monitored. Meanwhile, another 1.07 million sqm of new industrial space is under construction. After turbulent times, the Czech industrial market will have the capacity for further growth.

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108 REAL ESTATE expands further into Central and Eastern Europe, offering advisory services to developers and investors in Romania

108 REAL ESTATE, a real estate consultancy celebrating its 15th anniversary of successful operations on the market, is marking another milestone with its expansion into Romania. Following its presence in Slovakia, Hungary, and India, 108 REAL ESTATE's expansion into Romania is a strategic move driven by the company's focus on the movement of developers, investors, and tenants in the industrial real estate sector, encompassing both manufacturing and logistics.

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The development land market is reviving. However, one of the reasons is the problems of companies

The market for development land and older, mainly industrial buildings and premises in the Czech Republic is reviving after a long period of stagnation. This would probably be positive news if the acceleration was not caused by the economic downturn in some sectors or even the closure of many companies in the Czech Republic. For many of them, selling surplus real estate or land intended for future expansion is one of the few ways to avoid economic loss. According to real estate consultancy 108 REAL ESTATE, which specializes in this type of transactions, the increase in ownership transfers is also due to price leveling and fear of land unavailability due to the expected stricter protection of the agricultural land fund.

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108 REAL ESTATE Expands into India, assisting European and American developers

Fueled by demand from European and American developers and investors, real estate consultancy 108 REAL ESTATE has expanded into India. A new office in Delhi, the bustling Indian metropolis, will provide comprehensive professional services to companies tempted by the opportunities in the Indian real estate market. This expansion goes beyond the CEE region - the company's decision to enter Asia was driven by strong interest from clients in the US, UK, and Western Europe, leveraging their existing alliance with BNP Paribas Real Estate.

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Several strong impulses await the investment market

The volume of real estate transactions in the Czech Republic should approach the usual EUR 2 billion this year. This is indicated by several large deals negotiated in recent weeks. Domestic capital remains the main driver of the investment market - notable is one of the biggest changes of ownership in recent times, the sale of OC Arkády Pankrác, which was acquired by the Czech real estate fund Trigea from the Partners group. The deal will not be reflected in the investment balance until this year due to the review by the Office for the Protection of Competition. According to real estate consultancy 108 REAL ESTATE, this will not be the only retail property: the evergreen retail parks will be complemented by the acquisition of several shopping centres or shopping malls.

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The industrial space market is expected to grow this year

Decline in rental capacity of automotive companies. Impact of the downturn in heavy industry. Slight but steady decline in e-commerce. High competition from Poland and unfulfilled expectations for the arrival of workers from Ukraine. And a continuing wave of subletting and vacancies even in traditionally most attractive locations. The main analytical outputs based on the results of the Czech industrial space market in the last quarter of last year do not offer much reason for optimism. According to real estate consultancy 108 REAL ESTATE, the opposite is true: the market is starting to revive at the level of developer construction and tenant demand, responding, among other things, to the growing demand for chips. It is being positively affected by falling interest rates and indications of gradually increasing demand from households and businesses.

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Stricter protection of agricultural land will also significantly affect the industrial space market

The amendment to the Agricultural Land Fund Protection Act, which was approved by the Government last October and is expected to be adopted by the Chamber of Deputies in the first months of this year, will have a significant impact on the construction of production and warehouse properties in the Czech Republic. It will have an impact on the planning and construction of industrial sites, on land classified as Class I and II (according to the Bonitated Soil Ecological Unit, BPEJ). The amended law proposes a ban on the use of agricultural land of this quality for plans to build shops or warehouses larger than one hectare, as well as a ban on the use of these lands for conventional photovoltaic power plants.

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The Prague office market has frozen. The crisis will hit older buildings harder

High construction and relocation costs are behind the marginal movements on the Prague office market in recent months. Even if companies want to change their location, it is currently very difficult to secure a lease of around 5,000 sqm, especially in attractive locations such as Karlín, Anděl, Pankrác or Smíchov. Although buildings are gradually being completed (mostly pre-leased), which started to be realised at a time of cheaper bank financing, there is a noticeable lack of premium office space on the market. In fact, no new office buildings have started construction since spring 2022. These are the main outputs of the analysis of the office market development prepared by the Czech real estate consultancy 108 REAL ESTATE.

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Warehouses around Prague among the priciest in Europe

Only Helsinki, Munich, Oslo, Hamburg, London and a few other cities in the UK and Ireland have industrial rents higher than Prague. Warehouses near Prague are costing tenants far more than in Paris, Rome, Madrid, Budapest or Warsaw. In the Czech capital the price per square metre is EUR 96 a year, with the most expensive city, London, coming in at EUR 313. Berlin is roughly on a par with Prague, while in Warsaw the highest reported rent in Q3 was EUR 52 per year. These are the findings of a joint study carried out by the Czech real estate consultancy 108 REAL ESTATE and BNP Paribas Real Estate.

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