Take-up of industrial space is increasing and new development is taking off
The results for the first quarter confirm the slight optimism on the industrial property market. Companies leased more space than the case was in the same period in the previous three years. The increase of the new projects’ share in the total take-up and the growth in supply is also positive. Such are the findings arising from the statistics regularly prepared by Cushman & Wakefield’s Industrial Team.
Industrial space take-up
“More than 195,000 square metres of modern industrial space was leased in the first three months of this year. This is 26 percent more than in last year and as much as 38 percent more in the record-breaking year 2010,” says Jaroslav Kaizr, Head of Cushman & Wakefield’s Industrial Letting Team.
“The demand for new space among tenants grew in the first quarter – new space take-up accounted for 56 percent of the total leases. The rest is releasing and expansions to previously leased space. The result is that the vacancy rate is diminishing,” Kaizr adds.
The largest deal was the extension of HOPI’s lease at PointPark D1 (some 45,000 sq m). The largest new leases include the space rented by Skoda Auto at D+D park in Mlada Boleslav (about 27,000 sq m), Drylock Technologies at VGP Hradek nad Nisou (about 18,000 sq m), and Global Logistics Solutions at CTPark Pardubice (cca 16,000 sq m).
Industrial space supply
“The increasing supply is welcome, but it is not sufficient to cover new demand. 27,000 sq m was built in the first quarter and another about 200,000 sq m is under construction now. Just 109,000 sq m was built last year,” Kaizr says.
The developer D+D Real built and put in use industrial space in Mlada Boleslav in the first quarter; more space is currently being built by PointParks at Vsechromy near Prague, by CTP in Brno, Ostrava, Mlada Boleslav and Bor, by VGP in Brno, and by Panattoni in Nyrany near Plzen.
“In year-on-year terms, the amount of vacant space decreased by 50,000 sq m which results in about 276,000 sq m being available to tenants at present. This is just 6.6% of all existing industrial space in the Czech Republic,” Jaroslav Kaizr analyses the situation on the market and adds: “The space that is under construction is being developed on a pre-lease basis. As a result, its completion will not cause a major increase in the vacancy rate.”
Investment environment on the industrial property market
“The situation on the Czech industrial property market favours the strategy of holding real property portfolios in the long term. As a result, owners are not interested in selling, which is why there are just few ongoing industrial property transactions on the capital market,” Jaroslav Kaizr comments on the investment market situation.
Outlook for the industrial property market for 2013
“The situation on the industrial property market in the first quarter of this year has led us to be optimistic in our future development predictions. As long as there are no major economic shocks, we can expect supply and demand to be on the level of 2011. That was one of the best years in the history of the industrial property market,” says Jaroslav Kaizr.