News in the year 2020: Industrial properties around Ostrava are experiencing a boom
The year 2019 did not bring about any changes which would affect sought-after localities for industrial developers. They're attracted to traditional locations in the vicinity of large cities, which at the same time have good transport connections. In recent years, they've also been focusing on districts close to borders, and the Czech-German borderlands, which were previously neglected.
Given the current shortage of industrial zones with valid building permits, the land in the Moravian-Silesian Region is a novelty. Several new localities were prepared there last year, and large-scale construction activity is also expected this year. There are now five larger projects being planned around Ostrava, of which some are speculative. Examples are Ostrava Airport Multimodal Park and Ostrava Hrušov. The construction of Ostrava Poruba park, as a consequence of the full occupancy of the Ostrava Hrabová industrial zone, should commence this year. A tailor-made hall in Nový Jičín, where almost nine thousand square metres will be made available to the company Hydroscand, is currently being completed.
“The Moravian-Silesian Region still supports newly created industrial zones. This fact helps growing interest and activity in this area. Representatives are not indifferent to these projects, which is not matter-of-course given the current mood, where the construction of new warehouses is perceived negatively by the public. For example, the Moravian-Silesian Region is trying to help by strengthening public transport for employees,” says Senior Industrial Consultant Marek Sýkora of the real estate consulting company 108 AGENCY. An advantage is also one of the highest unemployment rates in the area, and a relatively cheap labour force in comparison with other regions.
Wherever the motorway leads, warehouses will spring up
Distribution costs are very high, and e-shops, e-commerce, wholesalers and the food industry, in particular, need to be close to their markets. Manufacturing plants, on the other hand, will want to go were there are working people, established manufacturing, and the chance to “headhunt” employees from nearby operations.
“Large-scale logistics and distribution of goods will always have to lie at the point from which there is ideal distribution to customers. That point is the D1 motorway and Prague. However, South Bohemia and České Budějovice are also in the viewfinder, but they are still limited by the fact that they are difficult to access due to an undeveloped motorway network,” points out 108 AGENCY's Executive Director Jakub Holec.
This year it will be e-commerce players, and retail and trading companies, which will have the greatest demand for premises. We have been able to observe this trend over approximately the last five years. With the automotive industry it's not yet so clear, because we're still waiting to see what will happen after the electromobility boom.
Half of construction is speculative
According to experts, market growth in industrial areas will slow down slightly this year, and not only due to the fact that there is practically nowhere to build in the traditional localities. Around Prague and Brno, construction would take place constantly regardless of the economy. But there is greater competition for new locations in Slovakia, Poland and Germany.
The current state of the supply of speculative sites will persist this year. At present, they comprise about 50 percent of the volume. However, this is a number that, according to developers, should decrease. In the year 2008, speculative construction comprised 70 percent, and after the subsequent market correction many projects stayed unoccupied in the long term. According to predictions, the cost of renting premises will also increase. This is a fact which occurs proportionately with companies' desire to expand, as well as higher construction and land costs. The Czech market is more stable, and there are no battles for extremely low rents, partly because there are relatively few speculative sites, so developers aren't forced to amend prices.
Warehouses must have something extra
Nowadays, real estate tenants are well informed and more professional. They often use the services of real estate brokers, which they evaluate as beneficial. “The average request is for seven thousand square metres, but 108 AGENCY has long dealt with all requests, including the smaller ones for less than five hundred square metres. The company must then count on the fact that, if it wishes to move, it must explore other options at least eighteen months before the end of the current rent contract,” explains Jakub Holec. The required commitment duration is usually at least 5 years, and is gradually growing over time. This trend is primarily related to the certainty of stability, which both developers and tenants thereby obtain.
Tenants also pay attention to office design and employee facilities. It's one of the tools for obtaining a competitive advantage. Thus, it often happens that offices in the halls have the same form as premium administrative buildings in the city centre. Another important variable is automation and robotization, where however contractors collide with the capacities of companies which manufacture these technologies.
The height of warehouse premises also plays an increasingly important role today. Preference is given to premises with a height of over ten metres, whereby net height is currently twelve metres. Public transport for employees to their jobs has also become matter-of-course. Eco-friendliness isn't left behind either; developers require the use of energy-efficient materials, and want buildings to be internationally certified.