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108 AGENCY: Industrial property market in 2Q/2016

(Czech Republic)
 
In the Czech industrial property market, the investors and developers continue being active, in particular in the Pilsen region and Greater Prague area. Due to almost half a million square meters being now under construction, the total stock of industrial space in the Czech Republic is approaching a number of 6 million square meters very fast. Real estate-consulting company 108 AGENCY informs about the industrial property market figures for the second quarter of 2016.
 
Vacancy rate and lease prices
 
In the Czech industrial property market, another decrease of vacancy rate was recorded. The overall vacancy rate dropped quarter on quarter from 4.79% to 4.40%. The average nominal rents remain relatively stable at 4.00 eur/sq m/month, a tendency of rising lease prices can be seen in the most attractive locations such as Greater Prague area, Pilsen and South Moravia regions.
 
Completed projects
 
Within the second quarter of the year, 7 projects with a total area of 140,000 square meters were completed. The largest amount of new industrial space was completed in the Pilsen region followed by the Greater Prague area.
In Pilsen, a speculative construction of the Mountpark Pilsen logistics park with an area of 43,700 square meters was completed. Among other major completed projects may include 23,500 square meters of warehouse space at P3 Prague D8 logistics park for VF Corporation or 20,000 square meters of warehouse space at P3 Prague D11 logistics park, that also represent the first building at the park and which is from half occupied by Exiteria. A 12,000 square meters warehouse unit was completed also at Brno West Business Park.
 
New speculative construction
 
In the second quarter of the year, new overall construction included 19 projects with an area of 293,755 square meters. The projects under speculative construction represent 38% from this new construction.
 
The largest project under speculative construction is a 30,000 square meters unit at Panattoni Pilsen Park West. The developer Panattoni Europe started a speculative construction of a 10,000 square meters unit also at Panattoni Park Prague Airport II. Semi-speculative development started at P3 Prague D11 logistics park, where the second building of the park with a size of 39,300 square meters is under construction - 15,950 square meters are being constructed there for FM Logistic, a tenant. Semi-speculative construction of a 29,000 square meters building started also at CTPark Teplice - 16,000 square meters are being constructed there for Personna International CZ, a tenant. Among other new projects under speculative construction belong the projects having less than 10,000 square meters.
 
Significant transactions
 
According to the published information, the most significant transaction in the second quarter of the year was a prolongation of Sportisimo's lease agreement for 23,900 square meters and the company's agreement for a construction of new 34,200 square meters at Prologis Park Prague-Rudná. Among other significant lease transactions may include a new construction of 24,000 square meters of warehouse space at Panattoni D5 Hořovice Park for Raben Group or a construction of new 20,500 square meters of warehouse space at Prologis Park Prague-Jirny for MALL.cz.
 
In the Czech industrial property market, the projects covering 498,800 square meters are under construction. Total supply of industrial space in the country stands at nearly 5,935,000 square meters, and thus we can expect it will overcome 6,000,000 square meters soon.
 
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Definitions:

Total stock / Total supply of industrial space
"A" category industrial space that is physically completed.
 
Total area under construction
"A" category industrial space owned by developer or investor, being constructed within certain period for lease to other parties.
 
Speculative / Semi-speculative construction
Speculative construction – construction of space without knowing certain tenant/s.
Semi-speculative construction – only part of space is constructed for certain tenant/s.
 
Vacancy rate
Ratio of physically vacant space in completed buildings on the total stock of "A" standard industrial space including office areas.
 
Landlord financial incentives
Discounts given by a landlord to a tenat in the form of rent free period, investments into leased space, etc.
 
Nominal rent
Lease price of industrial space before using the landlord incentives.
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