Q3 2022: Record low vacancy and record growth - market exceeds 10.6 million m2

TOTAL OFFER OF INDUSTRIAL PREMISES IN THE CZECH REPUBLIC

The total area of ​​modern industrial premises for rent in the Czech Republic increased to 10.65 million m2 in the third quarter of 2022. A total of 511,100 m2 of warehouse space in 18 industrial parks was completed. This represents a staggering 244% increase over the same period last year and a 249% increase quarter over quarter. At the time of completion, approximately 95% of the projects were already pre-leased.

The largest completed industrial hall is a building with a total size of 186,700 m2, which is located in Pannattoni Park Kojetín in the Olomouc Region. Construction began a year ago when the entire building was pre-leased to Amazon for a new distribution center. The second largest completed building with an area of ​​60,000 m2 is located in CTPark Bor and has been leased to an undisclosed tenant from the logistics sector. The third largest completed building was the hall in Ostrava's Airport Multimodal Park (34,000 m2), which was leased to two tenants, Czech Post and Geis.

PROJECTS UNDER CONSTRUCTION

At the end of the third quarter of 2022, more than 1,159,800 m2 of warehouse and production space was under construction, 10% less than in the previous quarter. Approximately 27% of these areas are located in the Karlovy Vary Region, 13% in the South Moravian Region and another 12% in the Pilsen Region. During the 3rd quarter of 2022, the construction of halls with a total area of ​​361,900 m2 was started. This includes the building with an area of ​​233,700 m2 in Panattoni Park Cheb, the largest sublease in the first half of 2022 in the Karlovy Vary region. The share of industrial premises in speculative construction (without a pre-secured tenant) rose slightly again in the third quarter of 2022, to 34.5%. By the end of 2022, we expect to complete approximately 340,000 m2 of warehouse and production space. Combined with the first half of the year, this would be the largest amount delivered to the Czech market in one calendar year in the history of the IRF. At the end of 2022, the industrial real estate market will approach the 11 million m2 mark.

REALIZED DEMAND

Gross realized demand (including renegotiations) in the third quarter of 2022 reached 482,400 m2, a decrease of 27% compared to the previous quarter. In a year-on-year comparison, this is a slight decrease of 6%. The share of renegotiations increased by 5 percentage points compared to the previous quarter, making up 27% of gross realized demand. In a year-on-year comparison, it was an increase of 11 percentage points.

Net demand totaled 354,100 sq m in Q3 2022, the lowest quarterly result so far this year and the lowest quarterly result since Q1 2021. This figure represents a 32% decline from last quarter and an 18% decline from the same period in 2021 .However, it should be mentioned that the strong result of Q2 2022 was due to a single transaction representing 233,700 m2. This is also why the results of net demand in the 3rd quarter do not deviate significantly from the results for the entire 1st half of the year. In addition to undisclosed transactions, the largest share of net demand was made up of logistics companies, which accounted for 32% of the total volume, followed by companies from the manufacturing sector (24%) and distribution companies (18%).

SIGNIFICANT LEASES IN DEMAND

The two largest new transactions were signed by logistics companies. The largest new transaction in the 3rd quarter of 2022 was a pre-lease in GLP Park Brno Holubice with a size of 31,400 m2, which was signed by Fast ČR. The second largest new transaction was a new lease of 31,400 m2 in Panattoni Pilsen Park West for DHL Supply Chain. Only the third largest new transaction fell outside the logistics sector. Optics retailer Fielmann has pre-leased an area of ​​29,100 m2 in Garbe Park Chomutov. The largest renegotiation (36,600 m2) in the third quarter was concluded at CTPark Hranice, where an undisclosed company from the automotive sector signed an extension of its existing contract.

VACANCIES

In the third quarter of 2022, the vacancy rate decreased again, to 1%. This is a decrease of 50 basis points compared to the previous quarter and a decrease of 43 basis points compared to the same period last year. In total, there is currently only 105,900 m2 of modern industrial premises on the market that are ready for immediate occupancy. Vacancy of industrial premises (excluding office premises) in Prague and its immediate surroundings is even more limited than on a national scale, and has been for more than a year. From the 2nd quarter of 2021, it is around 0%.

RENT

The highest achieved rent for industrial and logistics real estate (so-called prime headline) in the Czech Republic in the third quarter of 2022 was between €7.25-7.50/m2/month. In selected locations outside of Prague, rents are now rising faster than before, significantly above €6.00/m2/month. In some projects, especially in Prague, the rent is already around €8.50/m2/month. The amount of rent for office buildings reaches €9.50 - €12.50/m2/month. The usual amount of service fees is between €0.65-€1.00/m2/month.