Industrial space available in the Czech Republic has reached an 'absolute minimum', despite a record surge in development activity, according to new research from Cushman & Wakefield.
Compared to 2020, demand for industrial space in the Czech Republic last year increased by 61%, the highest figure in Central Europe, a region that also includes Poland, Romania, Hungary and Slovakia.
According to the Cushman & Wakefield report, only 1.6% of industrial stock is vacant (0.7% in Prague), while 1.11 million m2 is under development, three times more than a year earlier.
The growth in demand is driven primarily by logistics, distribution and e-commerce companies.
The CE space race
Modern logistic industrial space in the five countries amounted to over 46 million m2 at the end of 2021, up more than 10% over 2020, with Poland accounting for 52% of the space, followed by the Czech Republic (21%), Romania (12%), Hungary (9%) and Slovakia (7%).
However, when the space-to-population ratio is taken into account, the Czech Republic leads with 902 m2 per 1,000 inhabitants (+6% year-on-year), ahead of Poland with 625 m2.
Jirà Kristek, head of the industrial and retail warehousing team, Cushman & Wakefield said: ‘Poland recorded the greatest year-on-year growth in industrial space last year; approval procedures that are markedly faster than in the Czech Republic help the pace of development in the country.
'In addition, there are fewer locations suitable for new development in the Czechia than in Poland, which has a greater area and mostly flat terrain.’
However, he warned that ‘the pace may slow down somewhat in the upcoming quarters due to the current rise in the prices of construction material. New development may also suffer as a consequence of the situation in Ukraine, in terms of both supply and demand.’
Michal Soták, head of the capital markets team, Cushman & Wakefield added: “The development of the Czech real estate market still depends on the quantity of stock available for sale, and that is still very low in comparison with Poland, for example, yet also with Western European countries in general.’
After stable prices in the past decade, the Czech Republic saw strong growth in prime rent (the highest achievable rent for 5,000 m2 in a prime location), reaching €5.60 in the Prague area.
Prime rent in Hungary was €4.65 and remained at about €4 in the Poland, Romania and Slovakia.
The share of investment in industrial properties in the five countries reached an all-time high at 44% in 2021, outperforming office space for the first time.
The overall investment in storage facilities and halls grew 23% year-on-year to €4.2 tln in 2021, of which 70% in Poland and just 15% in the Czech Republic.
Prices of industrial properties in the Czech Republic went up by 20%, while the yield from premium halls dropped below four per cent for the first time.
Five companies account for around 42% of the market, defined by Cushman & Wakefield as ‘quite consolidated’ - CTP with 13%, followed by Prologis (10%), Panattoni (8%), P3 Logistic Parks (7%) and Segro (4%).
Panattoni was the biggest developer with nearly two million m2 of new logistic space in 2021, ahead of CTP with over 600,000 m2 opened.
