A Look Back: Record Demand in 2023, Sharp Decline in 2024

The year 2023 marked a historic peak for the Czech industrial market, with demand for industrial space reaching an unprecedented 2.96 million square metres. This volume represented the highest level recorded since the modern industrial market began.

However, 2024 saw a dramatic shift. Total demand plummeted by nearly half, falling to 1.91 million square metres. This slowdown was evident not only in the total area requested but also in the number of inquiries, which decreased significantly from 444 in the previous year to just 281.

Factors Behind the Downturn

Several key factors contributed to the market cooling in 2024:

E-commerce Normalization: After rapid growth during the COVID-19 pandemic, the e-commerce sector is returning to a more stable pace, leading to reduced demand for warehousing space. Weakening German Demand: A slowdown in neighbouring Germany prompted companies to adopt a more cautious stance on expansion, prioritising flexibility amidst market fluctuations. Industrial Production Slowdown: A general slowdown in industrial output, particularly within the significant automotive sector, also played a considerable role in dampening demand.

Hopeful Signs Emerge in Early 2025

Despite the challenges of 2024, the first four months of 2025 paint a more optimistic picture. Nearly 200 new inquiries have been recorded for spaces totalling close to 900,000 square metres. This uptick in activity suggests a possible return to stronger market performance.

Interestingly, the geographical distribution of demand is also evolving. Traditional industrial locations are seeing reduced interest, while regions offering more favourable operating conditions and improved access to foreign markets are gaining popularity.

Current Demand Landscape

The structure of demand for industrial space remained largely consistent through 2024. Manufacturing and logistics companies continue to dominate the market, accounting for over 70% of inquiries. There is also a notable revival in demand from the retail and wholesale sectors, which are actively seeking suitable premises once again. Conversely, the e-commerce sector, a major growth driver in previous years, saw demand drop by 40% year-on-year in 2024, reflecting ongoing consolidation within that segment.

For businesses evaluating their space needs in the Czech Republic, the current market dynamics present a complex but potentially opportune moment. While demand is below its 2023 peak, the signs of recovery in early 2025, coupled with shifting geographical preferences, indicate a market that is adapting and beginning to strengthen.

Source: property-forum.eu