According to JLL, Prague is still the largest sub-market in the Czech Republic, but a great deal of attention is also being paid to the border areas. In Q1 2018, almost 25% of all new industrial supply in the first quarter was delivered in the Karlovy Vary region for example. These include Panattoni Park Cheb and CTPark Aš, which together brought more than 50,000 sqm of new warehouse space to potential tenants. In another part of Northwest Bohemia, the Ústí nad Labem region, many projects have also been completed. The region represented 20% of the total completed industrial space and the third most active region by new premises delivered.
There are several reasons why attention is being paid to these regions. However, their strategic position and connections to good transport infrastructure play the most important role. Due to the proximity of Germany, for example, in the Karlovy Vary region, Westwards-oriented distribution centres are being built. To a great extent, the popularization of Northwest Bohemia has also helped to complete the D8 highway, as it connects the region to both our Western neighbours and the capital.
The first quarter of 2018 was also interesting in terms of the total volume of industrial real estate in the Czech Republic. Thanks to the completion of approximately 212,700 sqm of new space, the milestone of 7 million sqm of modern warehouse space were exceeded. Prague remained the largest single market, where 39% of all premises are located. The Pilsen region had a 15% share and the South Moravian Region followed with a 13% share.
Altogether, 34 new projects were under construction, 8 of which were built in the first quarter of 2018. The largest of these is the first hall in the new industrial area of Ostrava Airport Multimodal Park with an area of over 56,000 sqm.
By the end of 2017, the total volume of speculative construction was approximately 33% of the total construction of modern industrial premises. In 2018, this trend has strengthened further. However, in the case of completed buildings in Q1 2018, the share of speculative construction was at only around 11%. This figure increased significantly to around 45% in the case of projects under construction. Prime headline rents remained stable and varied between €4.00 - 4.50 per sqm per month.
Gross demand during Q1 2018 reached 420,300 sqm and increased by 41% compared to Q1 2017. Approximately 59% of the transactions were realized in Prague. The second most active market with 12% was the Pilsen region. Net take-up amounted to 192,500 sqm, which represents a year-on-year decrease of 17%.
The vacancy rate increased slightly at a national level, reaching 4.2%. In contrast, it fell to 3.3% in Prague and in Brno it was only around 2.0%.
Comparison with Slovakia
In Slovakia, the current total storage volume is around 2.17 million sqm and new projects are being built mainly around the cities of Senec and Nitra. In total, there is 187,000 sqm of space under construction, and approximately 250,000 sqm should be completed this year. In the first quarter, however, no new premises were delivered to the market. The Slovak industrial property market expects a high demand, but it will be mainly extended contracts or expansions rather than new transactions. The vacancy rate in Slovakia increased to 4.61%.
