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108 AGENCY: Industrial Property Market in 1Q/2016

The Czech industrial property market is in a good condition and companies are active in all its segments. Due to decreasing amount of vacant space for lease, there has been a pressure on the lease prices and along with that rising trend in speculative construction appeared, having 43,9% share in a total building activity today. Real estate-consulting company 108 AGENCY informs about the industrial property market figures for the first quarter of 2016.
 
Vacancy rate and lease prices
 
Due to strong demand coming in particular from the sector of e-commerce, retail and from the manufacturing companies, the industrial property market recorded another decrease of vacancy rate.  The overall vacancy rate dropped at 4,79%. The average nominal rents remain relatively stable at 4,00 eur/sq m/month, although there has been registered a moderate growth of lease prices yet, concretely in the most attractive locations such as Prague, especially in the area of the D1 highway and Horní Počernice, Pilsen and Southmoravian Region. In context with this tendency, the financial incentives provided by the landlords started reducing.
 
Completed projects
 
The biggest completed project, covering 33,500 sq m of warehouse space, represents the expansion of Globus company at Prologis Park Prague-Jirny. Another completed project with a size of 10,600 sq m of industrial space was completed at CTPark Kvasiny as well as a 10,500 sq m unit at CTPark Brno Modřice for MEGATECH Industries Hlinsko company.
 
Projects under construction
 
In the first quarter of 2016, the market recorded in total of 323,041 sq m of industrial space being under construction. In terms of new construction there has been seen increasing demand for the locations of western and northern Bohemia. One of the currently constructing projets is the Mountpark Plzeň with a size of 44,000 sq m built speculatively. Among other major projects under construction may include the expansion of VF Corporation company including 23,500 sq m at P3 Prague D8 or a 22,000 sq m warehouse unit being constructed at Panattoni Park Pavlov for DSV company.
 
Due to decreasing vacancy rate, a trend in speculative construction has appeared. After a longer pause, this trend has been rising again and participating in the current building activity with 43,9%.
 
Major lease transactions 
Within the first guarter of the year, there were concluded the lease transactions with a total volume of 434,460 sq m, new lease agreements represent 81% from this amount, the renegotiations represent remaining 19%. The most significant lease transaction was concluded at Panattoni Park Cheb on a 73,000 sq m distribution center of Tchibo company. Among other significant lease transactions may include 30,000 sq m of warehouse space at CTPark Plzeň for Lidl company, 25,000 sq m of production space in Planá for Yanfeng company, 22,000 sq m of warehouse space at CTPark Aš for Petainer company or 18,000 sq m of distribution space at Prologis Park Prague-Airport for Linemart company.
 
Definitions:
 
Total area under construction
„A“ category industrial space owned by developer or investor, being constructed within certain period for lease to other parties.
 
Speculative construction
Construction of space without knowing 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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