Q1 Industrial supply surges, unlike demand

Published: 19. 05. 2023

Industrial developers have been in a building frenzy over the past couple years, seemingly unable to keep up with demand. But despite vacancy of less than 2%, are signs emerging that they’re finally catching up?

You wouldn’t think so if you were just looking at the pipeline. During Q1 this year, developers added 238,000 sqm of of modern warehousing, bringing the total in the Czech Republic to over 11 million sqm. That’s a year-on-year spurt of 11%.

Source: Savills

By the end of this year, the total will almost certainly exceed 12 million sqm. Estimates on the current pipeline vary (JLL claims 1.23 million, Savills weighs in at 1.4 million). JLL figures that 34% of the space now under construction is being built speculatively, but adds that much of that is currently under negotiation.

On the other hand, Q1 gross take-up fell 50% to 374,000 sqm and net take-up dropped 29%, writes Savills, which notes that “represented the lowest level since the end of 2020.” Even rents have finally stabilized, though developers won’t be complaining. “From 2020, industrial headline rents went up by 55% in the core regional locations and by 78% in Prague,” according to Savills. Headline rents around Prague currently stand at €7.25 – €8.30.

JLL points out that 171,000 sqm of new space got underway during Q1 2023, with the biggest one being a 61,000 sqm pre-leased shed in Panattoni Park Cheb. “The volume of projects under construction has been above the one million square meter mark for the sixth quarter in a row,” says Lenka Jezberová (JLL). “And although the project delivery time is being extended, by the end of the year we expect the completion of another almost 800 000 sqm, which is currently under construction.”

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