Industrial demand has shifted from logistics service providers to manufacturing companies. CBRE is reporting a year-on-year increase of 22 percentage points to a 53% share of total demand in the Czech Republic.
A similar trend can be expected this year as well. Demand will be primarily driven by companies linked to the automotive and electronics industries. In terms of leases "under one roof", the years 2021 and 2022 are considered to be record years. During that time, the two largest leases in domestic history were also signed, namely 233,700 sqm in Panattoni Park Cheb (year 2022, the tenant is a fashion clothing retailer) and 186,700 sqm in Panattoni Park Kojetín (year 2021, the tenant is the world's largest e-shop originating from the USA). CBRE was the intermediary in both cases. In addition, the lease of the German company Tchibo in Panattoni Park Cheb (year 2021) also exceeded the imaginary threshold of 100,000 sqm.
In 2023, demand fell by 36% year-on-year to 938,400 sqm of newly leased space, almost 70% of which was pre-leased. The average size of the newly leased area was 6,300 m2. Eleven leases exceeded 20,000 sqm, but no new contracts were concluded for spaces larger than 60,000 sqm.
Total rental activity, including renegotiations, reached 1.53 million sqm last year, which represents a 30% year-on-year decrease. The share of extended existing contracts increased to 42% compared to 35% in 2022. From this year, CBRE experts expect the demand for new premises to be at the level of 800,000 sqm, which corresponds to the average of the last ten years before the pandemic.
"There are several reasons for structural changes in demand, including uncertainty regarding further economic developments and geopolitical changes. However, the most important factor is the end of the large-scale expansion of online retailers, who during the COVID-19 pandemic demanded a record amount of logistics space in connection with the enormous increase in e-commerce. While online shopping will continue to grow, it will not return to that pace. Thanks to this, manufacturing companies will come to the fore this year," comments Jan Hřivnacký, Head of Industrial Real Estate Leasing at CBRE, and adds an interesting fact: "For large requests, the height of the building is a very important factor, which enables more efficient use of space and is also related to greater robotization of processes. More and more often, as a result, we meet requests requiring a higher clear height of the hall than the standard 10 meters.”
Almost 922,000 sqm of new space was completed in 2023, the second-best result in the history of tracking. 87% of these are already occupied, confirming the continued strength of demand. On the other hand, developers reacted to its slowdown with more limited construction in the following years. Currently, 980,000 sqm are being built and only 600,000 sqm are to be approved this year.
The overall vacancy rate remains very low at 1.75%. At the same time, a new phenomenon in the form of grey vacancy is creeping up on the market. These are objects in the shell-and-core state, i.e. spaces in the final phase of construction, which, however, are formally considered unfinished by the developers, until they find their tenants. Currently, it is more than 300,000 sqm. In addition, the market is struggling with an increasing number of sublets. All of this together may contribute to an increase in the vacancy rate above the still low level of 3% this year.
Rents in premium spaces are currently around €7.55 per sqm/month, but large differences are evident between individual regions and between older and new construction.
There has not been a significant transaction on the market for more than a year. Property owners and potential investors had significantly different ideas about the price, and at the same time, the owners had enough liquidity, so they were not forced to sell and wait for a better offer.
