Published 25. 10. 2013

Industrial space take-up may beat the pre-crisis record

Take-up in the third quarter of this year overcame the expectations, climbing to a record-breaking 341,000 sq m. In the first nine months, more space was leased than in the same period of the record year 2007. The optimism on the market may lead to a new record. The take-up is attributable primarily to existing occupiers who prolong their leases and expand their facilities. New projects account for almost one-third of the take-up, though. Such are the findings of Cushman & Wakefield, the world’s largest privately held real estate advisor.

“814,000 sq m of space for logistic and industrial use was leased before the end of this September. The figure was 864,000 sq m for the full year 2007. We expect this figure to be outperformed,” says Jaroslav Kaizr, Head of Cushman & Wakefield's Industrial Letting Team.

New development is also maintaining a healthy pace this year. Almost 200,000 sq m was built in the first nine months, including more than 102,000 sq m in the third quarter. “New development has doubled over the third quarter of 2012, but it is still lagging behind the level of 2007. The low amount of new development in certain locations has led to limited supply, resulting in the pressure for rent increases,” Mr Kaizr says.

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Tech Data renegotiated its lease for almost 36,000 sq m at CTP Park in Bor u Tachova and extended it with almost 16,000 sq m of additional industrial space. Škoda Auto prolonged its lease for 33,000 sq m with DD Real in Mlada Boleslav, and Yusen Logistics had a 19,000 sq m hall built to suit at PointPark D1 in Vsechromy near Prague.

New development
The developers PointPark Properties (Vsechromy near Prague), CTP (Bor u Tachova, Ostrava, and Teplice) a VGP (Brno and Hradek nad Nisou) commissioned newly built space in the third quarter.

“The majority of new space is still being built on the basis of pre-leases, but even so the development is at its highest level in two years. After a long time, new development is taking place around Prague as well. For example, Segro is active in Hostivice near Prague and PointPark Properties is active in Vsechromy and in Zdiby near Prague,” Mr Kaizr adds.

Vacancy rate
At this point, new development is lagging behind the demand, so the vacancy rate has stayed below 7 per cent since the beginning of the year, reaching 6.9 per cent at the end of the third quarter (6.8 per cent at the end of the second quarter).
“Developers are building new speculative space to a limited extent only, so we can expect the vacancy rate to continue stagnating below 7 per cent. This long-term vacancy rate has already led to a change in the market sentiment – from an occupier market to a landlord market – which means that the landlords are gaining more negotiating power,” Mr Kaizr comments.

Market outlook

“The industrial market slowed down over the course of the summer holidays and so did the inflow in new demand for space. We can say with certainty now that 2013 will be one of the best years in the history of the Czech industrial property market, and if there are no unexpected shocks in the future, we expect this positive sentiment to spill over from the lease market to the land and capital markets as well. In fact, we are seeing the first signs of the upturn now,” Mr. Jaroslav Kaizr concludes.

For charts go to Market statistics CR

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