INDUSTRIAL PROPERTY MARKET - Q1/2021

Modern industrial premises in Q1/2021 in Prague and surrounding districts, were pushed to their limits to fulfill tenants needs. There is not enough of new development in the area, so the prices are skyrocketing around the capital. Rising sectors like e-commerce and fulfilment centres don’t have enough room to grow as fast as they could given more options. Municipalities divided approach to industrial development creates many imbalances between regions. Most recently between Central Bohemian region and Moravian-Silesian region. Tenants must look for their new premises years ahead to begin operations on schedule. This problem is one of many brakes, that indirectly hinders faster economic recovery.

In the first quarter of 2021 we saw a continuing drop in vacancy rate caused by slow depletion of the market. For example in Greater Prague region there will be only a limited number of newly built premises within the next two years. Vacancy in this region (including Prague-west and Prague-east districts) reached only 0.55 % with 15,285 sq m which is a historical record. Total current stock in Greater Prague is over 2.8 mil. sq m and considering the supply and demand, this region needs exactly what Ostrava is experiencing right now.

Completed construction reached 47,046 sq m and projects currently in construction equal a total of 465,088 sq m. Total stock of modern industrial premises for lease reached 9,287,324 sq m. Although many projects are being announced and it seems like the market is healthy, it is still plagued by long permitting processes, reluctance by the public and by lack of new options in areas with most demand. This is in contrast to situation in neighboring states, especially Poland.