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Pace of warehouse occupancy take-up slows down amid growing concerns over automotive industry

Numerous newly constructed storage facilities built without confirmed tenants have experienced extended vacancies lasting for six months or longer. This phenomenon, unheard of for years in the Czech Republic, has even led to a slight dip in average rents in some regions. After factoring in the lengthening rent-free periods, rising vacancy rate, and a growing trend towards subletting, everything points to the third quarter confirming a slowdown in momentum on the domestic industrial property market. This is the finding of an analysis conducted on indicative data by the Czech real estate and consulting company 108 REAL ESTATE. In the reporting period from July to September, gross demand totalled 158,867 sq m, with net demand at a mere 122,186 sq m. This record low quarterly result is the worst in at least four years.

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Poland is a hit among developers, tenants and investors of industrial space. Still catching up with the Czech Republic

Compared to the Czech Republic, it is four times larger in terms of area and approximately in terms of population. In recent months, it has set an example in many areas of the economy, including the construction, leasing and subsequent sale of industrial space. The supply of commercial real estate is also growing, thanks to massive investment in transport infrastructure and increasing purchasing power. This is most evident in the logistics and manufacturing segment, which has expanded by nearly 2.5 million sqm so far this year to a total of more than 31 million sqm.

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Developers plan to build almost 7 million m2 of industrial property. Including on brownfield sites

What do the Karlovy Vary, South Bohemia, Liberec and Ústí nad Labem regions have in common from the perspective of industrial property developers? This is by no means the weakest that construction supply and building activity has been in a long time. Quite the opposite. An analysis by real estate consultancy 108 AGENCY indicates that these four regions – relative to their current capacities – are expected to see the largest increase in new warehouse and manufacturing space in the next few years. Altogether, the consultants have identified development projects in the Czech Republic with a floor area of more than 6.8 million m2, which are in various permit and preparation stages – environmental impact assessment, zoning/building permits, or initial building work. Three developers account for 54% of the planned projects: CTP, Panattoni and Prologis.

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Czech logistics and manufacturing are increasingly running on solar power

Developers, tenants and owners of industrial and warehouse space in the Czech Republic are currently investing heavily in their own solar power plants. This trend reflects not only the progressive modernisation of the energy sector, but also the gradual move away from dependence on fossil fuels. Within this wave of innovation, we are also seeing extensive technological modifications being carried out in parallel on many buildings, aiming at an overall cut in energy consumption. One of the largest rooftop solar power plants to date is at the Urbanity Campus Tachov industrial park, with a reported installed capacity of 5 MW and an approximate annual production of more than 5,000 MWh of electricity.

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Industrial property market shaped by shorter supply chains and lower carbon footprint

Manufacturing companies are commanding a growing share of industrial property leases in the Czech Republic. In doing so, they are steadily displacing demand from logistics companies and tenants engaged in retail, especially e-commerce. In the second quarter of this year, lettings to manufacturers accounted for 60% of the 266,443 sq m newly leased. When lease renewals are factored in, lettings totalling 567,445 sq m were closed in the second quarter, up 50% on the previous quarter. These figures come from a fresh analysis by 108 AGENCY, one of the leading real estate consultancies for industrial property leases and sales.

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10.8 million steps challenge

Deal done! Our team has once again committed to walking 10.8 million steps for a worthy cause. And guess what? We surpassed our goal and together we walked an incredible 13,005,379 steps during the month of June!

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High office refit costs prove a drag on new lettings

With the cost of fitting out new offices doubling or even tripling, tenants are reluctant to move. Back in 2019, investing in office refits cost in the region of EUR 400–600 per square metre, but since then the price has spiralled to some EUR 1,000, with costs upwards of EUR 1,200 no exception either. These costs, combined with the rising expense of renting and running offices, are among the principal reasons behind the cooling office market in the first half of this year. Many businesses are opting to stay put for the time being. This partly explains why there has been an upswing in the share of older leases being renegotiated, which rose to 45% in the first quarter.

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Owners are disposing of older industrial sites - addressing rising operating costs

Skyrocketing energy and operating costs, improved cash flow, less accessible credit, partially higher efficiency of production or business activities... These are the main reasons why some owners of industrial premises or buildings have decided to sell them to investors. They then stay in the properties as tenants or gradually look for other premises. This is according to data from the real estate consultancy 108 AGENCY, which specialises in this form of sale and subsequent lease, known as Sale & Leaseback. The transactions and enquiries made indicate that isolated cases two years ago have grown to dozens in recent months.

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Those interested in flexible spaces can now use the first coworking comparison engine Desking.cz

The supply of coworking spaces has grown to more than 50,000 sqm in Prague alone, complemented by another 58,000 sqm of serviced offices. Due to the growth of this concept in other regional cities, the real estate consulting company 108 AGENCY decided to launch a clear and intuitive Desking.cz - the first coworking comparison engine in the Czech Republic.

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