INDUSTRIAL PROPERTY MARKET Q3/2022

In the third quarter of 2022 the industrial market slowed down in comparison to previous record breaking year and a half after tenant's demand decreased. One fifth of all entreprises in the Czech Republic announced that they plan layoffs which is one of the ways they are trying to counter rising energy prices and other costs. Developers are also more cautious in development of new industrial parks as rising prices of rents are not always sufficient to make up for initial investment. Investment often made with loan affected by increased interest rates by Czech national bank. Tough times not only for tenants, but for developers as well will continue to atleast march of next year. However its more likely that this period will last longer.

• In Q3/2022 stock of “A” class industrial premises for lease reached 10,652,456 sq m. 439,127 sq m of new industrial premises were delivered to the market which is a record.

• There are currently 1,152,780 sq m under construction. Most of these projects are pre-leased however. Over 236k sq m of new premises is expected to be delivered in Q4/2022.

• The vacancy rate stayed at a historical low of 1.03% with only 109,699 sq m available on the market for immediate lease. If we do not count shell and core premises, the vacancy rate dropped to only 0.80% which represents 85,371 sq m. There was a significant shift in the Moravian-Silesian Region, where the number of vacant premises increased significantly compared to the 2nd quarter.

• Both gross and NET take-up are slowing down in comparison to the H1/2022. First signs of market cool down manifested in take-up statistics as both gross and net take-up recorded around 50% drop in Q3/2022 q-o-q. Lower net take-up was last recorded in Q3/2020 during the covid-19 pandemic lockdown.