Detailed information on the development of the industrial real estate market in the first quarter was provided by the Industrial Research Forum (IRF). Its members include CBRE, Colliers, Cushman & Wakefield and JLL.
The largest project completed in the first quarter of 2023 was a new building at Panattoni Park Cheb South (42,500 square meters), which is leased to e-commerce company Autodoc and another undisclosed tenant. The second largest completed building (39,500 square meters) is located in Panattoni Park Chomutov North and is fully leased to Jungheinrich, a manufacturer of handling equipment. The third largest completed hall (21,900 square meters) is part of CTPark Ostrava Poruba and is almost fully leased to several tenants.
Projects under construction
At the end of the first quarter, a total of 1,287,400 square meters of warehouse and production space was under construction, representing a 5% increase over the previous quarter and a 9% increase over the same period last year. Almost 25% of the total area under construction is located in the Karlovy Vary Region, followed by the Pilsen Region with a 17% share and the South Moravian Region with a 16% share. In the last quarter, new construction of a total of 171,500 square meters of warehouse and production space was started. The share of premises under speculative construction (without a pre-secured tenant) was 32% during the quarter. By the end of 2023, we expect the completion of approximately 900,000 square meters of additional space, in which case it is possible that this year the total area of modern industrial space for rent in the Czech Republic will approach the 12 million square meter mark.
In the first quarter of 2023, gross realized demand (including renegotiations) reached 344,400 square meters, which represents a slight increase of 1% compared to the previous quarter and a decrease of 52% compared to the same period last year. The share of renegotiations decreased by 15 percentage points compared to the previous quarter and represented a 21% share of gross realized demand.
Net demand totaled 272,900 square meters in the first quarter of 2023, representing a 24% increase from the previous quarter and a 25% decrease from the same period last year.
The largest new transaction in the first quarter of 2023 was the CTPark Blučina pre-lease of 52,600 square meters, which was signed by Inventec. The second largest realized transaction was a pre-lease at CBPI Business Park, where UCT Fluid Delivery Solutions pre-leased a total of 26,500 square meters. The third largest new transaction was the pre-lease at Panattoni Park Pilsen West II, signed by Panasonic for a total area of 24,700 square meters. The largest renegotiation (14,100 square meters) in the first quarter was concluded by an undisclosed company in the retail sector in Prologis Park Prague-Úžice.
At the end of the first quarter of 2023, the vacancy rate in the Czech Republic reached 1.4%, which represents a quarter-on-quarter increase of 43 basis points. Compared to Q1 2022, the vacancy rate decreased by 23 basis points. In total, there is currently only 150,000 square meters of modern industrial space on the market ready for immediate occupancy. Vacancy of industrial warehouse space in the Prague region and its surroundings is even lower than the national rate and has been at an almost zero level since the 2nd quarter of 2021.
The highest achieved rent for industrial and logistics real estate (so-called prime headline) in the Czech Republic reached the level of €7.70–7.90/m2/month in the first quarter of 2023. Some special offers, especially in Prague, start at €8.50/m2/month. In selected locations outside Prague, the rent is now around €5.75-6.50/m2/month. The amount of rent for office buildings reaches 9.50-12.50 euros/m2/month. The usual amount of service fees is between €0.75-€1.00/m2/month.
"On the one hand, high rents are good news for property owners and investors, but on the other hand, it can be a problem for both new foreign investors and existing users who renew their leases during this period. Above all, in Prague and the surrounding area, for tenants, it is often an increase of almost 100% compared to their original conditions, so the negotiations are often very long and complicated. Good news for the market is the renewed appetite of developers for speculative construction in regions such as Pilsen, Brno or Ostrava, so tenants can still find new projects here at competitive prices compared to other markets around the Czech Republic," comments Robert Sgariboldi on the development of the market in the first quarter of this year , director in the industrial real estate leasing department at JLL.