What’s the impact of tariffs and the transformation of Europe’s automobile industry been on the Czech industrial market?
There are significant opportunities arising from the automotive industry’s transition toward electromobility, as evidenced by several major recent investments and leases. For example, the German company Vitesco is investing €188 million in a new plant at CTPark Ostrava to produce power electronics for future EVs. Then there’s Toyota, which plans to invest €694 million in its Kolín plant, not just to expand production but to manufacture new EVs along with complete battery systems. These are just example of investments showing how much Czechia would benefit from strengthening its high-quality technical education and developing more high value-added production, rather than being perceived merely as a low-cost assembly hub.
As for tariffs, their direct impact may end up being limited since less than 3% of Czech exports are destined directly for the United States. However, 80% of our exports go to the EU, with Germany alone accounting for 30%. Of Germany’s exports, 10% are then shipped to the US. In other words, the indirect effects—particularly in the automotive sector—could be far more significant. In fact, the high level of uncertainty surrounding tariffs has already had consequences, with some companies delaying major expansion projects and putting their investments on hold.
According to the Czech Automotive Industry Association, US isn’t a key export market for the Czech automotive industry. In 2023, just 0.8% of the sector’s exports (CZK 9.3 billion) went to America, and the Czech Republic doesn’t export finished vehicles. Still, higher tariffs
The increase in tariffs will nevertheless have a significant impact on a number of Czech suppliers of parts and services, especially those who supply German customers. They’re likely to suffer a significant reduction in export opportunities and a loss of orders.
The Czech automotive industry is strongly export-oriented. It’s closely linked to the European market, especially to the German market, where 29.4% of Czech exports are directed. Additional tariffs would therefore have primarily an indirectly impact by reducing demand for Czech parts and sub-supplies used in vehicles exported from the EU to the US. Especially for German premium vehicles.
We see automotive sector stabilization. Electromobility hasn’t reached the expected volume yet, and it’s being compensated by traditional fuel mobility. Some electrical models are expected to be produced a year later than planned.
Will we all have cheap, quality Chinese EVs within a few years and turn ourselves into fast consumers? It’s not exactly the ecological way forward.
How do you see the impact of nearshoring here?
Examples of this trend include the Taiwanese company C-TECH United Corporation, a global leader in lithium-ion and lithium-polymer battery modules, which is opening its first European representative office in Prague. The company plans to launch production in Czechia next year and is also considering building a European research and development center here.
Another example is Inventec, a Taiwanese electronics manufacturer, which established a 52,000 sqm built-to-suit new manufacturing facility at CTPark Blučina. That’s expected to bring all of their European operations under one roof in the Czech Republic.
Along with risk reduction and shorter delivery times, one of the key drivers of nearshoring are ESG considerations, an area where the Czech market performs strongly. As customers of manufacturing companies demand compliance with ESG standards, Czechia’s advantage is that it can provide shorter delivery routes (reducing CO₂ emissions and modern, green-certified production facilities. These give us a clear competitive edge.
For example, we helped our client FIEGE grow while providing logistics and transportation services for Nexen, which opened a tire production factory in Žatec. Another client of Knight Frank, Vitesco, has expanded its Czech operations and chosen Ostrava as a pace to grow its electromobility business.
Is current demand tilting either towards logistics or towards manufacturing?
As of H1 2025, manufacturing accounted for 33% of net take-up, compared with a 50% share in the previous year. The balance is largely influenced by a handful of major transactions; if these materialize, the share could shift significantly in either direction. During COVID, distribution and logistics substantially increased their share of take-up, but this has since returned to pre-pandemic levels. Nowadays I would say we are facing 50-50 mix of logistics / manufacturing enquiries.
The post-Covid rental boom is over…but where are we now? Are you worried about rising vacancy?
During the pandemic, the market experienced strong growth, fuelled by surging e-commerce demand and a shortage of available space. By 2022, vacancy had reached a historic low of nearly 0%, signalling an overheated market. Since then, vacancy has risen steadily to more than 5% in 2025. The shift reflects an increase in new project deliveries alongside easing tenant demand, bringing greater balance to the market. It’s not a crisis, but rather a return to more normalised conditions.
Since 2023, rents have stabilized, indicating that demand has caught up with supply and pressure for rapid growth has eased. With high levels of supply and softer demand, rents are now under downward pressure. This benefits tenants, who are securing shorter lease terms, reduced rents, or more generous incentives such as rent-free periods and fit-out contributions. But elevated construction costs mean logistics rents are unlikely to return to pre-pandemic levels.
Right now, supply significantly exceeds demand. Along with growing vacant stock, the pipeline remains at historically high levels. And remember, nearly a quarter of the space is still in shell-and-core condition. This places additional pressure on rents. There’s no way to avoid it: rising material, labor, and financing costs since 2020 have made new developments more expensive, forcing developers to pass their costs on to tenants. As a result, the new “normal” for rents will remain above pre-pandemic benchmarks.
The market now appears to be entering a more stable, mature phase, in which quality, location, and sustainability play a more prominent role. Green and ESG-compliant buildings are expected to be increasingly favored by both tenants and investors.
We see interest from companies but decisions consistently take longer than expected.
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