Key market figures for Q2 2022:

• The total area of Czech modern industrial space reached 10.1 million sqm
• Net demand broke the recent record in the history of IRF measurement – it reached 530,500 sqm
• The largest lease agreement in the history of IRF was signed: a pre-lease of 233,700 sqm
• Industrial warehouse and hall vacancy rates are declining again, standing at just under 1.5% at the end of Q2
• The highest achievable rents rose again throughout the Czech Republic, the most in Prague, up to € 7.50 per sqm per month
• More than 1.2 million sqm of new industrial space was under construction at the end of Q2 2022, almost 70% of this space is already pre-leased

Total stock & new supply

The total area of modern industrial space for lease in the Czech Republic increased to 10.14 million sqm in the second quarter of 2022. A total of 146,600 sqm of new warehouse space was delivered to the market within 15 industrial parks across the country. This represents a 16% increase compared to last year and a 51% q-o-q decrease. Approximately 90% of the projects were already pre-leased at the completion time. The largest completed industrial hall has a total area of 26,800 sqm, is located in the industrial VGP Park Olomouc, and was fully occupied at the time of completion. The second largest completed building is in Contera Park Ostrava D1 (25,000 sqm) and was fully leased to the distribution company AT Computers. The third largest completed project in Q2 2022 was a hall in Ostrava Airport Multimodal Park, also fully occupied at the time of completion, by the manufacturing company ABB (13,500 sqm).

Projects under construction

At the end of the second quarter of 2022, a record amount of space was under construction. A total of almost 1,271,000 sqm of warehouse and production space, an 11% increase compared to the previous quarter and a 93% increase compared to the second quarter of 2021. Approximately 19% of this space is located in the Olomouc region, another 16% in the Pilsen region and another 15% in the Moravian-Silesian region. Construction of halls with a total area of approximately 201,000 sqm has commenced. The share of speculative industrial space under construction rose again slightly to 33% in the second quarter of 2022. We expect about 900,000 sqm of warehouse and production space to be completed by the end of 2022. Combined with the year’s first half, this would be the most significant amount delivered to the Czech market in one calendar year in IRF´s history.

Industrial take-up

The gross take-up (including renegotiations) in the second quarter of 2022 reached 670,700 sqm, representing a 10% decrease compared to the previous quarter and an increase of 26% y-o-y. The share of renegotiations decreased by 25 percentage points compared to the last quarter and accounted for 21% of gross take-up. Year on year, the decrease was around six percentage points. Net take-up in the second quarter of 2022 totalled 530,500 sqm, an increase of 31% compared to the previous quarter and 36% compared to the same period last year. Distribution companies, in particular, accounted for the largest share of net demand (excluding confidential contracts) in the second quarter, accounting for 60% of the total volume. This was primarily due to the largest lease transaction in IRF's history, which took place in the second quarter. This was followed by logistics companies, which accounted for 27% of net take-up. Manufacturing companies were farther behind with a 13% share of the total volume.

Major leases within take-up

The most significant new transaction in Q2 2022 was a pre-lease at Panattoni Park Cheb of almost 233,700 sqm, signed by an undisclosed distribution company. The second largest transaction was a new lease at Prologis Park Prague-Rudná of 58,600 sqm, leased by the logistics company DB Schenker. The third largest new lease was a pre-lease at Panattoni Park Chomutov North, where the distribution company Amazon leased 14,900 sqm of space. The largest renegotiation (27,000 sqm) in the second quarter was at Segro Logistics Park Prague, where an unnamed company signed an extension to its existing lease.

Vacancy

At the end of the second quarter of 2022, the vacancy rate reached 1.5%. This is a decrease of 17 basis points compared to the previous quarter when the vacancy rate was revised to 1.7%. Compared to the same period last year, it decreased by 53 basis points. Overall, there is currently only 150,400 sqm of modern industrial space on the market ready for immediate occupation. The vacancy rate for industrial areas in the Greater Prague region was just 0.5% in Q2 2022 (including vacant office space and short-term leased space).

Rent

The prime headline rents for modern industrial and logistics properties in the Czech Republic reached €7.25 - 7.50 per sqm/month in the second quarter of 2022. Some special offers, especially in Prague, start at €8.00 per sqm/month. Rents for mezzanine office space stand between €9.50 - 12.50 per sqm/month. Typical service charges range between €0.65-1.00 per sqm/month.