The Czech market of industrial and logistics real estate comprised, in the middle of 2016, a total of 5,961,600 sq m of modern premises intended for lease. It will exceed the level of 6 million sq m by the third quarter of this year.
We asked Miroslav Kotek, Associate Director of Industrial and Logistics Real Estate at the consultancy company JLL for an interview on this topic.
How would you characterise the main locations?
Prague, which is currently offering 2,340,000 sq m of modern premises, represents the largest Czech location, having a one third share of the overall volume of the market with industrial and logistics real estate. The first warehouses were historically built in Prague-west, particularly by the D5 motorway towards Plzeň. However, development activities were gradually expanding southwards (along the D1 towards Brno), northwards (along the D8 in the direction of Ústí nad Labem) and eastwards (along the D11 motorway in the direction of Hradec Králové). Prague and its submarkets are, in the long term, the most sought after locations and interest is mainly shown by logistics and retail/e-commerce companies. In Prague where is now concentrated 52% of all construction of modern warehousing in the Czech Republic, we can observe growing competition amongst development companies. Speculative development is carried out in Prague-west and Prague-east. Rents for top quality premises in Prague are between 3.80 and 4.25 EUR/sq m/month. The second largest market in the Czech Republic is currently the Plzeň region with a share of 16% and 932,000 sq m of modern warehouse premises. There is also significant competition amongst developers and, due to massive demand from production and retail companies, the speculative development of 43,900 sq m of the Mountpark Pilsen project was commenced near Plzeň. Rents for top quality premises within the Plzeň region are between 3.75 and 4.20 EUR/sq m/month. The third largest market, with a total of 864,000 sq m of modern premises and a 14% share in the Czech market, is Brno. This area is dominated by the development company CTP Invest which owns and develops a majority of land intended for the development of light production and warehouses. Premises situated directly in Brno are being leased by production companies, research and development centres and logistics companies. Rents in Brno and its neighbourhood are between 3.90 and 4.25 EUR/sq m/month.
What other locations are currently being significantly developed?
A great deal of interest is evident in North-west Bohemia, this being along the D8 motorway as well as in individual micro-locations, such as Teplice and Kadaň. This is associated with the industrial character of this area where there are a number of production companies that also require professional logistics services. Further development of this region is expected once the D8 motorway is completed. I believe the area of East Bohemia (Hradec Králové/Pardubice), which is connected with the capital by the D11 motorway, also has great potential. Nevertheless, future development depends on the continuation of the D11 motorway towards Jaroměř and then onto Polish territory as well as the expansion of the D35 motorway from Opatovice nad Labem to Olomouc.
Are there any vacant premises on the market?
The Czech market currently shows the vacancy rate at at 4.7%. If we leave out some of the larger speculative projects in Prague, Central Bohemia and Plzeň, there are only smaller units available within individual projects in the market. Demand for premises of more than 20,000–30,000 sq m cannot currently be placed that quickly. However, these can be built-to-suit within several months.