Someone’s applied the brakes to the Czech industrial sector juggernaut that Covid unleashed. Seen through the prism of vacancy, it’s not so dramatic. Nationwide, vacancy rose 52 bps to 2.5%, which amounts to a bit more than 300,000 sqm. But while that’s hardly a scary number, as Ondřej Miček notes in a new Savills report, it‘s the third straight quarterly increase. What’s remarkable is the fall to just 196,000 sqm of take-up as it’s the lowest quarterly leasing result since 2011. Net take-up for Q1 was 114,000 sqm, 55% down from Q1 2023.
Data source: Savills
The industrial pipeline hasn’t suffered yet, however, with 1.5 million sqm (a new record) currently under construction. Just over half of that igure is being built on a speculative basis. But deliveries fell 39% from Q4 2023 to 155,500 sqm, with the busiest region being the Karlovy Vary submarket (60,600 sqm). While this sounds like a recipe for lots of vacant space, Miček reports that these speculative developments “are often put on hold once they reach the shell & core stage and this is keeping the vacancy rate low.”
Moreover, 54% of the quarter’s take-up was made up of pre-leases. After growing by leaps and bounds during Covid, headline rents around Prague were flat at the beginning of the year, ranging from €7.25 to €7.50 per sqm/month (for 5,000 sqm units). Landlords are offering 2-4 rent-free months for 5-year deals, though incentives are generally higher in regional submarkets.
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