The second quarter this year was a record on the Czech market in terms of constructing modern industrial premises. Similarly, the outlook for the next period is already taking shape.
The Czech Republic currently has 6.65 million square meters of modern industrial space for rent, of which about 176,300 square meters in twelve new buildings were completed in the second quarter of this year. Only half a percent of vacant areas remained in the completed buildings. 575,100 square meters are also currently under construction, up 34 percent from the first quarter of this year. 72 percent of the newly built space already has tenants lined up.
The Total Demand Has Risen Quarter-over-Quarter
Only seven buildings in the Czech Republic offer an area of more than 10,000 square meters. However, potential tenants currently have 274,600 square meters of vacant industrial areas available to rent.
Total actual demand grew to 308,800 square meters in the second quarter, including renegotiations (lengthening the lease terms or renegotiating the conditions), which is three percent more than in the first quarter, but eight percent less than in the same period last year. Total demand from the second quarter of the year was comprised of 55 percent from pre-leases, 25 percent renegotiations, 12 percent expansion and 8 percent new rentals.
Actual net demand not including renegotiations reached 231,200 square meters, which is one percentage point less than in the first quarter of this year and 11 percent less than in the second quarter of last year.
Prague vs. the Regions
If we look at the figures according to the division between Prague and the regions, there are currently 2,585,300 square meters of modern industrial space for rent in Prague and 4,061,200 square meters in the regions. In the capital there are 104,800 square meters of vacant space and 169,800 meters in the regions. In the second quarter, 37,300 square meters were completed in Prague and 139,000 square meters in the regions.
Net absorption or change in the occupancy rates of storage areas including office in-builts from one period to another totaled 213,100 square meters, with 50,100 square meters being located in Prague and 163,000 square meters in the regions. And the average effective rent (per unit of 5,000 square meters) was between EUR 3.15 and EUR 4.25 per square meter per month.
2017 is Going to be a Record Year
According to experts from CBRE, the latest figures show that the largest number of premises in the Czech Republic will be under construction in history since the record year of 2008, even in the second half of this year. At the same time, there will be a record amount of completed space.
However, CBRE has also observed the first signs of a slow decline in net realized demand, with demand being seen mainly by companies in need of storage space and this trend will continue. The pressure on rising rents will also increase in premium city locations.