We bring you the updated 108 REAL ESTATE Industrial Map, which details industrial property ownership and compares rental levels across the Central and Eastern Europe (CEE) region. Our map covers the Czech Republic, Slovakia, Hungary, Romania, Slovenia, Croatia and Serbia, while also reflecting our expanded presence in Southeast Europe.
The real estate consultancy 108 REAL ESTATE has been registering an increase in demand for warehouse and production space in the Czech Republic since the last quarter of last year. The increasing interest is mainly due to the activity and flexibility of developers, gradually decreasing rents, greater availability of labour, as well as the still excellent condition of the domestic automotive segment. For some longer-term leases, effective rents, i.e. after incentives, have fallen below EUR 4 per sqm per month. This is a price that the domestic industrial property market has not seen for several years. This is a positive boost for a number of international companies and operators looking for suitable space across the CEE region.
Location, price, transport accessibility, labour availability and up to 5th place energy performance / sustainable building certification. These are the main criteria for companies when selecting warehouse space. This was shown by the results of the Trends in Czech Logistics survey conducted last year by the SKLAD association in cooperation with Ipsos. According to the real estate consulting company 108 REAL ESTATE, preferences are very similar in the case of the production space segment. However, despite the survey results, it turns out that it is the costs associated with the operation of industrial real estate that have a great influence on the success of the Czech Republic's offer in international tenders of global tenants.
Nearly 8 million square meters of new manufacturing and warehousing space could be developed in the Czech Republic in the coming years. The total supply of industrial real estate would thus exceed 21 million sqm. A significant part of the new buildings could be built on existing brownfield sites, which in some regions are almost the only option for new construction in a meaningful location - among other things, due to the increased protection of valuable agricultural land. A new study by real estate consultancy 108 REAL ESTATE shows this.
The real estate consultancy company 108 REAL ESTATE registers an increase in interest in leasing industrial space in the Czech Republic in the second quarter of this year. However, the revival, expressed in roughly 357,000 sqm of leased warehouses and production space, was visible only in selected regions. It was mostly related to manufacturing companies or companies linked to the automotive sector. After a prolonged period of uncertainty, the latter recovered to a high level of performance. Already in the first half of 2024, automotive companies in the Czech Republic produced 774,310 vehicles, the highest in modern history. The boom is also synergistic in the related sectors - manufacturing and shipping.
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.
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.
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.
Numerous newly constructed storage facilities built without confirmed tenants have experienced extended vacancies lasting for six months or longer. This phenomenon, unheard of for years in the Czech Republic, has even led to a slight dip in average rents in some regions. After factoring in the lengthening rent-free periods, rising vacancy rate, and a growing trend towards subletting, everything points to the third quarter confirming a slowdown in momentum on the domestic industrial property market. This is the finding of an analysis conducted on indicative data by the Czech real estate and consulting company 108 REAL ESTATE. In the reporting period from July to September, gross demand totalled 158,867 sq m, with net demand at a mere 122,186 sq m. This record low quarterly result is the worst in at least four years.
