Czech Republic A gradual increase of vacancy

In Q2 2024 the Czech industrial market reached 12 mln sqm. However, we are also witnessing a gradual increase of vacancy, now at almost 3 pct. It’s good news for occupiers as in some regions or locations there might be chance to negotiate (or renegotiate) more favorable lease terms with landlords. The prime rental rates in Greater Prague have widened and now span between EUR 7.00-7.50 per sqm per month, while remaining stable in other Czech regions. Net take-up risen, on q/q and on y/y basis, the activity of tenants improved so it is expected that the whole property market could stabilize and bring more certainty for all parties.
Jiří Kristek, head of Industrial and Retail Warehousing Team, Cushman & Wakefield

Total stock & new supply

The modern, developer-led warehouse stock in the Czech Republic reached 12.02 mln sqm in the Q2 2024. Approx. 117,500 sqm were delivered to the market within 11 industrial parks across the country. This represents a 53 pct decrease compared to the same period last year and a decrease of 21 pct q-o-q. At the time of completion, approx. 57 pct of the projects were already pre-leased.

The largest completion in Q2 2024 was a part of a new building in CTPark Žatec (18,700 sqm), which was at the time of completion fully leased to a logistics company Fiege. The second-largest completed project was a building in SmartZone Mikulov (16,000 sqm), which was partially leased to an undisclosed company. The third largest completed project was in CTPark Pohořelice (11,800 sqm), fully leased to multiple undisclosed tenants.

Projects under construction

At the end of Q2 2024, approx. 969,800 sqm of industrial space was under construction in the Czech Republic, representing an increase of 9 pct compared to the previous quarter and a decrease of 30 pct compared to the same period last year. Almost 36 pct of the total space under construction is situated in the Karlovy Vary region, followed by Moravia- Silesia region with a 20 pct share and Prague & Central Bohemia with a 17 pct share.

The share of speculative space under construction increased to 32 pct. At the same time, developers commenced new construction of 209,700 sqm of modern industrial space in Q2 2024, with 73 pct of this space speculative.

Industrial take-up

During Q2 2024, gross take-up, including renegotiations, reached 462,900 sqm. This represents a significant increase of 191 pct compared to the previous quarter and a 22 pct decrease compared to Q2 2023. The share of renegotiations decreased by 4 pct compared to the last quarter, accounting for the second largest share of gross take-up (33 pct).

Net take-up in Q2 2024 totalled 311,800 sqm, showing a major increase of 216 pct quarter-on-quarter and an increase of 15 pct year-on-year. Pre-leases accounted for the largest share of gross total, reaching 45 pct.

The Industrial Research Forum will not share the list of major leases within take-up this quarter, due to the large amount of confidential information.

Vacancy

At the end of Q2 2024, the vacancy rate in the Czech Republic reached 2.9 pct, representing an increase of 88 basis points q-o-q. Compared to Q2 2023, the vacancy rate increased by 129 bps. A total of 351,400 sqm of modern industrial premises is available for immediate occupation. This is the highest volume of vacant space on the market since Q4 2020 when over 326,000 sqm was available for immediate occupation. The vacancy in modern industrial space in Prague & Central Bohemia is lower than the national rate, reaching 2.3 pct at the end of Q2 2024.

Rent

Prime headline rents decreased slightly at the level of around EUR 7.00-7.50 sqm/month in the Czech Republic in Q2 2024. Selected prime locations outside of Prague remained stable, achieving around EUR 5.70-6.60 sqm/month. Rents for in-built office space stand between EUR 9.50-12.50 sqm/month. Service charges are typically around EUR 0.75-1.00 sqm/month.