CBRE assembled its findings for the first half of 2022 into a single report, that leads off with the conclusion that the logistics is still running the show. It’s not a bad shout, considering the sudden collapse in demand for residential space (see high mortgage rates) and the jittery office sector. The real estate’s research team claims that new leases from January to June topped 900,000 sqm to achieve 33% y-o-y growth. That’s been achieved via 130 rental contracts, of which 24 were 10,000 sqm or bigger and 6 were +20,000 sqm. Even more encouragingly, preleases made up 59% of all demand and vacancy basically isn’t. Full stop. As with the hottest ever summers on record, this has been the busiest Q1 ever, except for last year. Perhaps with the weather in mind, CBRE’s head of industrial Jan Hřivnacký says that “The priority for logistics tenants is starting to become sustainability, which is influencing development to a greater extent than ever.” He says that as of the end of June, there were 1.3 million sqm under construction, 20% of which is speculative. What’s particularly stunning is the increase in rent levels. End users who insist on space in Prague will now pay €8 per sqm. And nobody’s moving into new space that costs less than €5 anymore. (The official headline for the illustrative graph above is: Development of the highest achievable rents in industry and logistics)
On that same topic, CTP reports completion of a warehouse in Hradec Kralove, which is remarkably its first ever in the city. The logistics company Geis has already taken over the +5,000 sqm building. A second warehouse building (of about 7,000 sqm) is already underway, with completion planned for spring of 2023. In conjunction with city officials, CTP also built a new intersection near the industrial park with controlled traffic lights designed to improve traffic flow. City officials appear to appreciate the investment. “I am pleased that we’ve been able to establish a meaningful cooperation with CTP, despite the complicated history,” said Hradec Kralove’s mayor Alexandr Hrabálek. “It demonstrates that, by working together, it is possible to solve even the most complicated problems.”
Local elections took place over the weekend and for Prague the result was also complicated. As in the last national elections, the winner was a coalition of three parties (led by ODS) called SPOLU. This makes Bohuslav Svoboda (head of ODS in Prague) the most likely new mayor, since the last mayor Zdeněk Hříb’s party (Piraty) managed just 13 seats in the 65-seat assembly. That’s six less than SPOLU’s 19, but a good deal better than STAN’s showing of 5 seats (STAN is led by Petr Hlaváček). If the three parties can figure out how to get along, they could form a governing coalition that mirrors the national government. But there’s no guarantee they’ll succeed. There’s considerable concern that ex-mayor Zdeněk Hříb and his Pirates lack the necessary political skills (or interest) to get along with the other parties. Basically, Hříb managed to annoy his potential coalition partners so much over the last four years that they don’t know if they can deal with him again. The other parties that have seats in the assembly are ANO (14 seats), Praha Sobě (11) and a coalition of right-wing fringe parties (3). Bohuslav Svoboda served as Lord Mayor of Prague once already, from 2010 to 2013.
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Iain Fanthorpe (Bluehouse Capital): Rents rising to match inflation
