Q3 2024: Premises under construction significantly exceed delivered areas this year

COMMENT

Miroslav Kotek, Head of Industrial Agency, Colliers International:

"Despite the large amount of space under construction, the vacancy rate on the Czech industrial real estate market remains low compared to neighboring countries. Despite the increase in the volume of speculative construction, new vacant spaces are coming to the market only slowly. The strategy of landlords is to continue to preserve new buildings in an advanced stage of construction and to wait for the interest of new clients. This year, a cooling of the realized demand can also be observed on a large scale, which is caused by the extension of the decision-making processes of clients and global uncertainty. Thanks to the slowly falling prices on the Czech market and the lack of free space, many clients are considering cheaper alternatives in neighboring markets."

TOTAL OFFER OF INDUSTRIAL PREMISES IN THE CZECH REPUBLIC

The total area of ​​modern industrial premises intended for rent in the Czech Republic reached almost 12.2 million m2. A total of 163,500 m2 of warehouse space in 9 industrial parks was delivered to the market. This represents an 11% decrease compared to the same period last year and a 64% increase compared to the previous quarter. At the time of completion, approximately 76% of the projects were already pre-leased.

The largest completed industrial hall in the 3rd quarter of 2024 was the new building in CTPark Blučina (52,600 m²), which at the time of completion was fully leased to the electronics manufacturing company Inventec. The second largest project was the building in Panattoni Park Kladno South (21,000 m²), which is fully leased by the manufacturing company Hanon Systems. The third project is a building in the park P3 Lovosice (16,800 m2), which does not yet have a tenant.

PROJECTS UNDER CONSTRUCTION

At the end of the 3rd quarter of 2024, a total of 1,045,000 m2 of warehouse and production space was under construction, representing a 5% increase from the previous quarter and a 26% decrease compared to the same period last year. Almost 33% of the total area under construction is located in the Karlovy Vary Region, followed by Prague and the Central Bohemian Region with 19% and the Moravian-Silesian Region with a share of 17%.

The share of speculative construction rose to 36%. During the 3rd quarter of 2024, the construction of 204,900 m2 of modern industrial space began, with almost 53% of this space being speculative.

REALIZED DEMAND

Gross realized demand (including renegotiations) reached 335,100 m2 in the past quarter. This represents a decrease compared to the previous quarter (-28%) and a substantial increase compared to the same period last year (61%). The share of renegotiations increased by 4 percentage points compared to the previous quarter, and they thus have the second largest share in the total gross realized demand (37%).

Net demand totaled 203,100 m2 in the third quarter of 2024, representing a quarter-on-quarter decrease of 35% and a year-on-year increase of 35%. Pre-leases accounted for the largest share of the total gross realized demand, which reached 49%.

The largest transactions of the 3rd quarter were pre-leases. ThermoFisher Scientific leased 54,000 m2 in DMC Park Brno, an undisclosed manufacturing company from the automotive sector leased 39,500 m2 in CTPark Žatec. The third largest transaction was the pre-lease of 29,300 m2 to an undisclosed distribution company in CTPark Blatnice.

VACANCIES

At the end of the 3rd quarter of 2024, the vacancy rate in the Czech Republic reached 3.1%, which represents a quarter-on-quarter increase of 33 basis points. Compared to Q3 2023, the vacancy rate increased by 169 basis points. In total, there are currently 377,900 m2 of modern industrial premises on the market ready for immediate occupancy. This is the largest volume in the last 5 years. Vacancy of industrial warehouse spaces in Prague and the Central Bohemia region is lower than the national rate and reached 2.2% at the end of the 3rd quarter of 2024.

RENT

The highest achieved rent for industrial and logistics properties (so-called prime headline) in the Czech Republic remained stable at the level of 7.00-7.50 euros/m2/month in the 3rd quarter of 2024. In selected locations outside of Prague, rents remained stable, staying at around 5.70-6.60 euros/m2/month. The amount of rent for office buildings reaches 9.50-12.50 euros/m2/month. The usual amount of service fees varies between 0.75-1.00 euros/m2/month.