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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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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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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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Pace of warehouse occupancy take-up slows down amid growing concerns over automotive industry

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.

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Poland is a hit among developers, tenants and investors of industrial space. Still catching up with the Czech Republic

Compared to the Czech Republic, it is four times larger in terms of area and approximately in terms of population. In recent months, it has set an example in many areas of the economy, including the construction, leasing and subsequent sale of industrial space. The supply of commercial real estate is also growing, thanks to massive investment in transport infrastructure and increasing purchasing power. This is most evident in the logistics and manufacturing segment, which has expanded by nearly 2.5 million sqm so far this year to a total of more than 31 million sqm.

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Developers plan to build almost 7 million m2 of industrial property. Including on brownfield sites

What do the Karlovy Vary, South Bohemia, Liberec and Ústí nad Labem regions have in common from the perspective of industrial property developers? This is by no means the weakest that construction supply and building activity has been in a long time. Quite the opposite. An analysis by real estate consultancy 108 AGENCY indicates that these four regions – relative to their current capacities – are expected to see the largest increase in new warehouse and manufacturing space in the next few years. Altogether, the consultants have identified development projects in the Czech Republic with a floor area of more than 6.8 million m2, which are in various permit and preparation stages – environmental impact assessment, zoning/building permits, or initial building work. Three developers account for 54% of the planned projects: CTP, Panattoni and Prologis.

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Industrial property market shaped by shorter supply chains and lower carbon footprint

Manufacturing companies are commanding a growing share of industrial property leases in the Czech Republic. In doing so, they are steadily displacing demand from logistics companies and tenants engaged in retail, especially e-commerce. In the second quarter of this year, lettings to manufacturers accounted for 60% of the 266,443 sq m newly leased. When lease renewals are factored in, lettings totalling 567,445 sq m were closed in the second quarter, up 50% on the previous quarter. These figures come from a fresh analysis by 108 AGENCY, one of the leading real estate consultancies for industrial property leases and sales.

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The industrial real estate market continues to strengthen – but it’s undergoing a major transformation

On one hand there is 1 million sq m of new warehouses this year alone, but on the other hand demand is decreasing. The length of leases required by developers’ increases to a minimum of five years versus the departure of some tenants from the e-commerce and automotive sector. Securing extensive leases and pre-leases by large logistics companies versus the need to sublet part of these premises. The growing importance of energy-efficient buildings and the emphasis on the lowest possible operating costs. The results of the third quarter on the domestic industrial real estate market show that the transformation of this entire segment has already begun, according to the recent report published by the real estate consulting company, 108 AGENCY.

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108 AGENCY triple strike with PKZ Logistics

108 AGENCY managed to mediate the expansion and relocate the logistics company PKZ Logistics to three new halls in the Czech Republic and Slovakia, all within six months.

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