Czech industrial real estate is showing early signs of demand recovery. But it’s a recovery story with complications thanks to disagreements over murky vacancy figures.
“Vacancy has seemingly stabilized at 3.1%, but a more realistic view is obtained by adding in buildings stopped just short of completion. This more realistic vacancy rate then reaches 6.8%, which exceeds vacancy rates achieved in some neighboring markets,” explains Josef Stanko, Director of Market Research at Colliers.
He claims that with 550,000 sqm of shell-and-core space now semi-available, the phenomenon has become a structural characteristic of the market. These facilities await tenant commitment before final completion, typically available within three to six months of lease signing. So is it vacant? Or is it in the pipeline?
“I believe the vacancy rate is right — the official vacancy I mean — even though we know there is secondary vacancy that is not reported nor seen currently,” says Jan Palek from GLP. “This secondary vacancy is free or not-used pallet spaces at logistics premises. Those spaces are often quickly filled by new business we developers do not get to see.” He points out that while some logistics tenants aren’t using space as much as efficiently as hoped, none are trying to return any. Meanwhile, manufacturing clients aren’t reporting any issues at all.
“I acknowledge the presence of a certain percentage of properties in core-shell status,” says Jakub Kodr of CTP, which is arguably the most aggressive proponent of the strategy. However, I am not concerned; the market is trending positively, with increasing demand from production companies looking to expand or establish a base in the CEE region.”
Statistics bear this out. Gross realized demand reached 511,600 sqm in the first quarter, exceeding the five-year average despite broader economic uncertainties. The market’s total stock grew to 12.44 million sqm, representing a 4.7% year-on-year increase, while new completions added 155,900 sqm during the period.
In fact, there are two markets in Czechia, based on size and geography. While there’s still a scramble for smaller units (sub-3,000 sqm) in the major cities, larger regional facilities face greater challenges.
That’s increased the bargaining power some tenants now wield, reflected in increasingly favorable incentive packages from landlords. Prime headline rents remain stable at €7.00-7.50 per sqm monthly, but the underlying deal terms show growing tenant leverage.
Pavel Sovička (Panattoni) warns that starting sheds on spec doesn’t always have to work out.
“Filling up vacant space in the regions is harder than it was in the past,” he says. Especially the bigger ones, where companies who are consolidating operations or relocating from Western Europe need to order automation equipment and robots.
“The delivery time [for the technology] ranges between 12 – 24 months, so tenants don’t need the space so quickly…new builds can be delivered within 9-12 months, so there’s really huge competition for existing big boxes of +30,000 sqm,” says Sovička.
The timing mismatch creates particular challenges for older buildings competing with newer sustainable developments.
Cushman & Wakefield’s data indicates that while smaller units remain hot property in major markets, the bifurcation between urban and regional demand continues widening.
Manufacturing activity, which represents nearly 45% of Czech and Slovak industrial stock, continues performing relatively well. Logistics companies dominated first-quarter leasing activity with 62% of volume, followed by manufacturers at 23% and distributors at 15%. However, Cushman & Wakefield notes a shift in leasing patterns, with renegotiations representing 62% of total activity in Q1 2025 – the highest share in five years.

Annual demand (in thousands of sqm)
The quarter’s largest transaction involved a 147,000 sqm lease renegotiation at Prologis Park Prague-Jirny, highlighting the market’s current preference for extending existing arrangements rather than relocating. Net take-up accounted for only 38% of gross activity, indicating tenants’ cautious approach to expansion.
“The first quarter gross take-up of 500,000 sqm is super strong and shows the stability of the market,” observes Sovička, though he acknowledges broader market challenges remain.
Construction activity shows robust pipeline development, with 1.6 million sqm currently under active construction and an additional 646,700 sqm scheduled for completion this year. Both Colliers and Cushman & Wakefield data confirm the Karlovy Vary Region’s dominance, accounting for 54% of new deliveries and 25% of current construction activity.
Trade tensions continue creating background uncertainty, though immediate impacts remain limited. The temporary postponement of new U.S. tariffs provides breathing room, but potential policy changes could accelerate production shifts toward Central European locations.
“Construction may be influenced by newly introduced measures from U.S. President Trump, who is imposing tariffs on certain materials,” Cushman & Wakefield notes in its analysis. “However, the effects will vary depending on the type of property.”
Martin Polak from Garbe claims that any lingering development bottlenecks are due to underlying conditions in the Czech Republic. “Speed of construction is more linked to building permits rather than demand,” he explains. The extended approval processes mean projects with ready-to-go sites in good locations can still find tenants, though timing has become less predictable.
Ultimately, however, it will be up to demand to take the remaining vacant space – completed or otherwise – off the market.
Also in ThePrime