According to Jakub Holc, director of 108 Agency, two main factors influence the increasing activity of production companies. The first is the apparent effort by companies to shorten supply chains – mainly due to high transport costs and the uncertain manufacturing and economic situation in China, which was evident for example with car chips. "This decentralization, i.e. bringing production closer to the end customer, is also related to companies' efforts to reduce the carbon footprint of their products as much as possible. This is an increasingly important parameter not only for consumers, but also for financing banks," explains Jakub Holec.
Despite the growth in demand from manufacturing, most often technology companies, the period from April to June brought an increase in vacancies. This is currently around 2.3% when shell & core space is included. And since over 700,000 square meters of modern industrial space could be completed and delivered to the market in the second half of the year, the monitored indicator may swing over 3% at the end of this year. "We haven't had so much free space in a long time. Nevertheless, it is good to keep in mind that a vacancy rate of between 4 and 6 percent is considered healthy," says Matěj Indra, head of the 108 Agency's industrial and logistics real estate leasing department, according to whom developer activity continues despite the slightly weakening demand from tenants.
The change in the supply level is best demonstrated by the situation in Prague and the Central Bohemian Region. In the last two years, it was practically impossible to contract a vacant (even an older) industrial building in this region. Currently, however, the most vacant areas are located in this region, which is also due to the fact that a good third of the total of approximately 11.5 million square meters of modern industrial space in the Czech Republic is located here.
At the opposite end are the South Bohemian and Zlín Regions and the Vysočina Region with the current minimum offer. Currently, there are projects in the preparation or implementation phase with a volume of almost 7.5 million square meters. Active construction is registered by 108 Agency for projects with an area of 1.1 million square meters. The Liberec, Karlovy Vary and Ústí Regions have the most ambitious plans for new construction in the context of the existing offer.
Source: 108 Agency
The robust existing construction as well as the large-scale plans of the developers open up space for concessions towards the tenants due to the weakening demand. This also applies to already realized industrial properties owned by investors. "For the second quarter, we see more incentives, rent relief and other benefits. Landlords are reacting even more favorably than before to short-term leases, requests for a lower volume of space and sub-leases, the number of which has increased by leaps and bounds," Michal Bílý, head of the 108 Agency market research department, summarizes other trends resulting from developments in the second quarter.