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The industrial real estate market continues to strengthen – but it’s undergoing a major transformation

On one hand there is 1 million sq m of new warehouses this year alone, but on the other hand demand is decreasing. The length of leases required by developers’ increases to a minimum of five years versus the departure of some tenants from the e-commerce and automotive sector. Securing extensive leases and pre-leases by large logistics companies versus the need to sublet part of these premises. The growing importance of energy-efficient buildings and the emphasis on the lowest possible operating costs. The results of the third quarter on the domestic industrial real estate market show that the transformation of this entire segment has already begun, according to the recent report published by the real estate consulting company, 108 AGENCY.

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108 AGENCY triple strike with PKZ Logistics

108 AGENCY managed to mediate the expansion and relocate the logistics company PKZ Logistics to three new halls in the Czech Republic and Slovakia, all within six months.

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The area utilised for industrial and warehouse space in the Czech Republic exceeds 10 million sq m in June

Moving into June, industrial premises in the Czech Republic will exceed the magical limit of 10 million square meters of leasable space. According to 108 AGENCY, the real estate consulting company, it is highly probable that, by the beginning of 2023, almost one million sq m of production and warehouse halls will be added to this total. The positive news is that the regeneration of brownfields and the modernisation of older industrial buildings and areas are taking up an ever-increasing share of the offer. At the same time, 108 AGENCY consultants observe the trend of building low-energy buildings with an emphasis on an environmentally friendly approach. This is generally combined with other renewable energy installations.

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Warehouses availability will not improve. Developers are slowing down construction due to rising costs

Logistics and production halls currently under construction in the Czech Republic have reach the dizzying volume of 1,034 million sq m. Nevertheless, there is already a risk that there will be a shortage of warehouses in particular. Only 234,000 sq m are now being built which don't have a pre-signed tenant, while the rest are already pre-arranged. Many developers, who speculatively began construction of halls, have slowed down production or postponed planned projects due to the rising prices of building materials, lack of capacity of supply companies and a sharp increase in energy costs. Due to the constant demand, there is the potential for continued rent growth. In the first quarter of this year, it exceeded an average of €5/sq m/month, even outside the attractive locations around Prague and Brno.

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Demand for warehouses in the Czech Republic is breaking records. Developers are responding with extensive construction

Clients' interested in new industrial premises in the Czech Republic had very little to choose from last year. Thanks to record demand, which reached a record 2.39 million sq m in gross terms for the whole year, vacancy rates fell to 1.63%, a historic low. The result was also affected by a lower volume of completed industrial properties, mainly due to the impact of anti-pandemic measures. However, this changed at the end of the year when a record 800,000 sq m of industrial space was under construction. The urgent need to meet tenants' enormous demand is also evidenced by the fact that the share of speculative development has once again increased after a longer period of inactivity.

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The Czech industrial real estate market in the second quarter of 2021: Decisions need to be taken quickly, and a back-up plan needs to be in place

A lack of materials and an increase in the price of construction work is troubling the industrial real estate market in the Czech Republic. Industrial space in desirable locations is in short supply. Occupancy rates in Prague and the close surroundings are rising and vacancy rates have almost reached zero. Tenants are well aware of the situation and it has become more common for them to extend their lease contracts for longer periods.

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Rent for industrial premises strongly influenced by rising costs for construction materials

Over the past few weeks, there has been a sharp rise in the price of crucial commodities in construction, mainly of steel, plastics and wood. Prices are soaring in retail and in the industrial buildings for manufacturing or logistics sector, and these are having a marked impact on already high rental costs.

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Industrial premises for lease in the greater Prague region almost exhausted. Vacancy rate falls to all-time low of 0.55 %

The first quarter of 2021 saw record low vacancies in the greater Prague region, affirming consistent high interest in industrial premises in premium locations. High demand is pushing lease prices upwards, with lease prices having grown by 25 % per sq m year-on-year within the Prague cadastral district, for example. The Czech industrial real estate market is being impeded by drawn-out approval processes and a lack of new options in areas with the greatest demand.

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108 AGENCY presents first edition of its development report. Developers most active in Ostrava district

The Czech real estate consultancy, 108 AGENCY, has published the first edition of an original project. Its report provides an overall summary of the most interesting data and information from the industrial real estate market from the perspective of individual development companies and owners. An updated report will be issued regularly twice a year.

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