The Slovak industrial market slowed down slightly due to still rising energy prices and other costs. Developers are more cautious with new constructions and so are foreign investors. This will give an opportunity to local developers and larger companies with a stable background. At the beginning of 2023, 108 Agency Slovakia expects a cooling down of the market.
In the third quarter of 2022, the Slovak industrial market slowed down slightly due to still rising energy prices and other costs. Developers are also more cautious in the development of new industrial parks as rising prices of rents are not always sufficient to make up for initial investment. At the beginning of 2023, we expect a cooling of the market, foreign investors are already more cautious and in anticipation of how the situation on world markets will develop. An opportunity will be created for local developers and larger companies with a stable background. How long this unstable period will last is difficult to estimate, reports 108 Agency Slovakia.
In the third quarter of 2022, the total stock of modern industrial and logistics premises of class A in Slovakia reached more than 3,575,000 sqm. There is 278,212 sqm under construction and from that amount 49% is in the Bratislava region, but still, the tenant's demand for vacant premises is higher than the supply. Vacancy keeps falling from 5.70 % in Q2/22 to 4.47 % in Q3/22. Total leasing activity in Slovakia during the 3rd quarter of 2022 reached more than 198,000 sqm, while the net take-up amounted to 127,000 sqm. Speculative development projects in Slovakia are in decline and are being replaced by pre-signed projects with clients. The prime yield is 5.25%.
"The market continues to be under the pressure from inflation, interest rates and rising rents. However, the vacancy rate continues to decrease rapidly, as the demand from new tenants is still high and companies with a stable background expand. We can expect developers to build less and less speculatively, which will open up investment opportunities for local developers in the near future,” says Dominika Ukropcová, Research Analyst from 108 Agency Slovakia.
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