Savills: Q1 industrial take-up stalls

Published: 14. 05. 2024

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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