The industrial premises market in the Czech Republic is resisting the waves of coronavirus. It could even be said that the two waves, which have tested other commercial real estate sectors, have made the warehouse sector stronger and more resilient. This is evidenced by almost all major performance indicators. BNP Paribas Real Estate, the international consulting company, illustrates the results for the third quarter, which will also characterise this sector in the upcoming months.
Despite a year-on-year decrease in the volume of concluded leases, the vacancy rate fell quarter-on-quarter, to the current 5%, in the period under review. By the end of September, developers had completed over 500,000 sq m of new warehouse space. The total volume of industrial real estate currently under construction is only slightly lower than this. A new trend is showing in the revival of once neglected regions - the growing activity of developers is especially evident in the Moravian-Silesian region, and also partly in the Ústí nad Labem region.
The growth of e-commerce continues to be the dominant factor in the new demand for warehouse space. It comes both directly from e-shop operators and through logistics operators who distribute shipments. So far, manufacturing companies have also had a significant share in the volume of leases concluded.
It would be wrong to say that tenants from the field of e-commerce are focussing primarily on Prague. Surprisingly, the Pilsen region holds the highest share (36%) of concluded lease transactions since the beginning of the year. This amounts to a total of 154,200 sq m of newly occupied industrial space. There are currently five projects under construction, with a total area of over 120,600 sq m, the largest of which is located in CTPark Bor (90,300 sq m).
The construction of warehouses and production facilities maintains a continued high growth rate. Speculative development, or construction without pre-leases, was 35% in the third quarter. However, this focuses exclusively on the most attractive locations around Prague, Pilsen or Brno.
"In the regions, investors are focussing on securing land and preparing projects for the zoning or building permit stage. Implementation begins only after their future user is contractually secured," adds Dušan Drábek, Head of Industrial and Logistics Agency at BNP Paribas Real Estate. According to him, this is a logical strategy for developers, correcting a larger volume of free space, and the associated possible pressure on the price, as well as minimising their business risks.
It is also thanks to the prudence of developers that the rent of industrial premises hasn't shown any major fluctuations. This applies to the whole of the Czech Republic. The highest rent achieved in the 3rd quarter ranged between €3.50 and €4.90 per m2 per month.
CTPark Ostrava-Hrabová (photo credit: www.ctp.eu)
A significant shift in the market is the growing supply of warehouse space in the Moravian-Silesian region. There are currently five projects under construction, and two more will be launched in the coming months. By the end of 2021, over 260,000 sq m of new industrial premises in the Moravian-Silesian Region should be completed, which is the highest of all regions in the Czech Republic.
The interest of tenants and the motivation of developers is evident, with one example being CTP. After the success of CTPark in Ostrava-Hrabová, where there are 75 firms on the 90 hectare site, they are developing another area at CTPark Ostrava Poruba. In total, this area will offer just under 100,000 sq m of space for logistics and production. Other developers, such as P3, Concens, GLP and Contera, are also planning projects here.
"Even in this region, the influence of e-commerce is evident as the dominant sector in the demand for new warehouse space. This is followed by automotive and engineering production," concludes Dušan Drábek.
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