Cushman & Wakefield have summarised Q3 2020 on the industrial market in Central and Eastern Europe. The CEE market is booming with record-high occupier activity reported in YTD 2020. The region has seen the strongest growth for logistics demand in Europe overall, predominantly driven by logistics and e-commerce. The acquisition of the Goodman portfolio by Gazeley is one of the largest logistics transaction seen in the region in the last decade and reflects the growing importance of the sector. Prime industrial yields remain at their 10-year lows.
Poland: The industrial market is currently the fastest-growing commercial real estate sector in Poland. 2020 has seen robust occupier demand amid more muted developer activity. The record volume of lease transactions, of which new deals and expansions accounted for 71%, resulted from many factors such as the requirement for increased inventory holdings among companies wanting to secure uninterrupted supplies, as well as the continued growth of e-commerce and multichannel sales strategies. Poland is gaining in importance as a major production and logistics hub of Western Europe. Companies that are present on this market or planning projects in Central and Eastern Europe will be securing additional space to prepare for the risks of potential supply chain disruptions in the future.
Czech Republic: Demand for industrial space decreased by about 18% in the year-to-date in comparison with the previous year, more significantly in regions dominated by manufacturing spaces. The market was driven by e-commerce and logistics in particular. However, most leases came from production companies expanding their spaces in the Pilsen region, which recorded the highest annual growth of take-up in the Czech Republic. Renegotiations accounted for half of this year’s take-up and we expect that the high share of renewals will continue in the near future.
Hungary: The Budapest industrial and logistics market is buoyant with record-high demand levels and an apparent undersupply of modern space, pushing the vacancy rate further down. YTD demand level reached a massive 30% increase on the already strong 2019 levels. This has attracted to the market some newcomers who intend to deliver new stock on a speculative and BTS basis alike as continued low vacancy rates and reasonably stable demand levels are expected going forward.
Romania: Logistics demand hits new records in Romania with a 94% growth registered year-on-year. Bucharest is perceived as an important regional hub as an increasing number of retailers are investing in major distribution centres around the capital city of Romania. As the Covid-19 pandemic boosted the e-commerce market, both online retailers and delivery (courier) companies searched for new warehouses in the largest urban areas. The market is expected to maintain its growth momentum going forward as pre-lets accounted for 62% of the take-up in the Q1-Q3 period.
Slovakia: The continuous growth of net absorption demonstrates that the industrial market in Slovakia remains in good health. Asking rents remain largely unchanged. The total industrial stock in Slovakia increased by 52,200 sqm to 2,725,700 sqm in the third quarter, which represents a quarterly growth of 2%. The total volume of leases reached 85,800 sqm. This represents a year-on-year decrease of 35%. The largest requirements were reported by companies needing warehouse and distribution space (e-commerce in particular). We expect Slovakia’s industrial stock to grow by 113,000 sqm in the next two quarters, which would result in an almost 9% increase year-on-year.
