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Industrial

Warehouses availability will not improve. Developers are slowing down construction due to rising costs

Logistics and production halls currently under construction in the Czech Republic have reach the dizzying volume of 1,034 million sq m. Nevertheless, there is already a risk that there will be a shortage of warehouses in particular. Only 234,000 sq m are now being built which don't have a pre-signed tenant, while the rest are already pre-arranged. Many developers, who speculatively began construction of halls, have slowed down production or postponed planned projects due to the rising prices of building materials, lack of capacity of supply companies and a sharp increase in energy costs. Due to the constant demand, there is the potential for continued rent growth. In the first quarter of this year, it exceeded an average of €5/sq m/month, even outside the attractive locations around Prague and Brno.

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Industrial

Demand for warehouses in the Czech Republic is breaking records. Developers are responding with extensive construction

Clients' interested in new industrial premises in the Czech Republic had very little to choose from last year. Thanks to record demand, which reached a record 2.39 million sq m in gross terms for the whole year, vacancy rates fell to 1.63%, a historic low. The result was also affected by a lower volume of completed industrial properties, mainly due to the impact of anti-pandemic measures. However, this changed at the end of the year when a record 800,000 sq m of industrial space was under construction. The urgent need to meet tenants' enormous demand is also evidenced by the fact that the share of speculative development has once again increased after a longer period of inactivity.

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Industrial

The Czech industrial real estate market in the second quarter of 2021: Decisions need to be taken quickly, and a back-up plan needs to be in place

A lack of materials and an increase in the price of construction work is troubling the industrial real estate market in the Czech Republic. Industrial space in desirable locations is in short supply. Occupancy rates in Prague and the close surroundings are rising and vacancy rates have almost reached zero. Tenants are well aware of the situation and it has become more common for them to extend their lease contracts for longer periods.

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Industrial

Industrial premises for lease in the greater Prague region almost exhausted. Vacancy rate falls to all-time low of 0.55 %

The first quarter of 2021 saw record low vacancies in the greater Prague region, affirming consistent high interest in industrial premises in premium locations. High demand is pushing lease prices upwards, with lease prices having grown by 25 % per sq m year-on-year within the Prague cadastral district, for example. The Czech industrial real estate market is being impeded by drawn-out approval processes and a lack of new options in areas with the greatest demand.

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Industrial

Rent contracts for industrial premises are being extended. This is due to strong demand

In the commercial real estate market, there is currently a shortage of industrial and logistics premises, as well as land suitable for their construction. This is mainly due to growing demand, and the fact that local governments aren’t motivated by tax benefits to construct them. The situation is most evident in the vicinity of large cities, and also affects the growth of rent levels. Moreover, it has also caused a new trend in the form of the extension of rent contracts. The first new projects of over 20,000 sq m can only be expected in the second half of 2022.

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Industrial

Industrial real estate rent prices to increase in some locations by up to 10 % in 2021

The fourth quarter of 2020 closed a year full of changes and upcoming trends, also reflected within industrial real estate. Despite the pandemic, the industrial segment proved stable, and there was a significant acceleration in the development of e-commerce, and specifically the digitalisation of the entire retail sector. There remains a high demand for premises on the market from investors and clients, and this interest puts pressure on prices, which will increase significantly at premium locations in 2021.

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Industrial

Logistics service boom

Interest in outsourcing logistics services is growing in the industrial real estate market. Primarily due to flexibility, customers no longer have to make a long-term commitment, and they can adapt the scope of the storage and related services to their current needs. In today’s dynamic times, this is proving to be an interesting competitive advantage. As a response to this trend, 108 AGENCY established a new division which is exclusively responsible for the brokering of logistics services.

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