Gross realised demand on the Czech industrial real estate market has risen above the five-year average in the first quarter of this year, indicating the potential for market recovery. Over 155,000 sqm of new space has already been delivered to the market this year, and a further 1.6 million sqm is currently under active construction, according to a survey conducted by Colliers.
There is currently 1.6 million sqm of industrial space under active construction, of which 646,700 sqm should be completed this year. Another 551,000 sqm has shell & core status, which means they are waiting to be completed the moment they find a tenant. These sites could be available within 3-6 months. „The increase in the number of shell & core buildings is becoming a structural phenomenon, with a 51% year-on-year increase in such space," says Josef Stanko, Director of Market Research at Colliers, adding that the total area of space on the market reached 12.44 million sqm, which represents a year-on-year increase of 4.7%.
There are now 2.6 million sqm of projects with completed permitting processes awaiting future tenant demand. Plus, there are 2.8 million sqm of potential projects in advanced stages of permitting. The total potential planned area for future construction stands at around 5.4 million m², which is 16.5% more than last year.
"Vacancy has stabilised at 3.1%, where it has been for the third consecutive quarter. However, a more realistic view is obtained by adding the projects stopped just short of completion. They represent a full 3.7%. This more realistic vacancy rate then reaches 6.8%, which exceeds the vacancy rates achieved in some neighbouring markets," explains Josef Stanko. According to his experience, logistics companies are also operating on the market and providing subleases of their unused space. These sites, based on available information, contain additional, but hard-to-quantify, vacancies.
Gross realised demand in the first quarter was above the five-year average. The volume of leases reached 511,600 sqm. However, one large transaction at Prologis Park Prague-Jirny contributed to this result. The majority of new lettings were pre-lettings and new lettings, but net take-up accounted for only 38% of gross take-up.
The largest transaction of the first quarter was the renegotiation of a logistics company's lease in several buildings of 147,000 sqm at Prologis Park Prague-Jirny. Second place was claimed by Linde Wiemann's pre-lease in the Industrial Park Nymburk with an area of 40,000 sqm. The third largest transaction was the renegotiation of 31,900 sqm for logistics company DHL Supply Chain in two buildings at Panattoni Park Cheb.
According to the Industrial Research Forum, the highest achievable rent on the Czech industrial market remained stable at €7.00 - 7.50/month/sqm. The highest achievable rents have remained at the same level for three quarters, although we are increasingly seeing a strengthening of tenants' bargaining power.
"China's trade war with the US and the unclear implementation of the transatlantic tariff policy have not yet affected the Czech industrial real estate market fundamentally. However, clouds are slowly growing over the German economy. With signals of zero economic growth for the EU’s largest economy in 2025, we can expect potential economic uncertainty in the Czech Republic, as well," summarises Josef Stanko. Paradoxically, he explained that the slowdown could mean significant investment in domestic industrial and developmental infrastructure due to pressure for more diversified production.
