The most expensive warehouse space in the world is in London, where prime space costs $35 per square foot (the amount includes rent, service charges and taxes). Hong Kong ($26 per square foot) and Tokyo ($22 per square foot) follow in the rankings.
As part of its Impacts research programme, Savills says that the limited supply of vacant land in these cities, where industry and logistics compete with other real estate sectors and at the same time these areas face a shortage of available space, is keeping industrial vacancy rates below 3%. In Dubai, for example, strong demand and a shortage of Class A warehouse space led to a 7.7% year-on-year increase in warehouse space costs to $19 per square foot, ranking Dubai fourth globally. While storage costs are generally lower in the United States, they have seen some of the largest proportional increases over the past 12 months, rising an average of 20.1% across the seven major industrial markets. In Europe, for comparison, they grew by an average of 6.7%.
The year-on-year increase in storage costs in Prague by 35.8% is completely out of step with the global trend. This increase is the result of an exceptionally low vacancy rate, which is still hovering around an all-time low (the national vacancy rate fell from 1.8% in the first quarter of 2022 back to 1.4% in the second quarter of 2022). The rent increase is also influenced by the fact that Prague has become a "nearshoring" center for many European companies.
Savills further informs that when it comes to premises, rising storage costs are just one component that tenants consider in their decision-making: labor costs have increased by an average of 6% globally in the past year, and electricity and diesel costs by 39, 4%.
Chris LaRue, head of the industrial real estate leasing department at Savills CR and SR, comments on the market situation: "In some circles, Prague is referred to as the Paris of the East thanks to its beautiful architecture. Now Prague is compared to Paris for one more reason. In the last year, the cost of renting warehouse space here has reached almost the same level as in Paris." According to him, the significant increase in rent for warehouse space in the capital of the Czech Republic is primarily due to the longer-term limited supply of free warehouse space and unabated demand. From last year to this June, only Los Angeles recorded a greater increase than Prague.