According to Savills latest report, 2021 was the best year on record for the Czech industrial market in terms of tenancy activity, despite the low volume of new completions and extremely low vacancy rate. Gross take-up totalled a staggering 2.32 million sq m, being 53% higher than the previous record of 1.55 million sq m seen in 2020. Annual net take-up (excl. renewals) reached 1.48 million sq m, a 46% increase over the former record of 1.01 million sq m registered in 2017.
Tenant activity in the Czech industrial market at its peak, Prague effectively out of available space
Total national stock of modern industrial space intended for lease reached 9.7 million sq m. Of that 551,100 sq m was added to the market during the year, being the lowest annual new supply since 2014. Without any significant shift seen in the past few years, 34% of the total national industrial inventory is found in Prague, mostly around the Prague Outer ring-road. The Pilsen region is the second most developed submarket in the country, accounting for 15% of nationwide stock, and the region of South Moravia ranks third with a share of 12%.
Lenka Pechová, senior research analyst, Savills CZ&SK, comments: “With a record volume of space under construction or in shell & core finish across the country exceeding 1.11 million sq m, the volume of completions shall pick-up in 2022. At the end of 2021, construction was under way at 50 industrial parks across 13 regions. The construction pipeline has grown to 1.12 million sq m, while majority of that space was under construction in the Moravia-Silesia region (24%), Olomouc region (22%) and Central Bohemia (15%). The already densely developed Prague submarket was facing critical land constraints as only 60,600 sq m of space was under construction. The volume of speculative construction totalled 311,300 sq m, again with the largest share located in the regional market of Moravia-Silesia.”
Chris LaRue, head of industrial agency, Savills CZ&SK, adds: “Czech industrial market continues to experience strong demand in a limited supply environment, resulting in a very challenging situation for tenants from both availability and cost perspectives. Rising fuel, energy and construction costs coupled with labour shortages are additional factors through which industrial occupiers are having to navigate. In addition to that, at the end of February, the manufacturing, logistics and construction sectors have been impacted by Russia’s invasion of Ukraine, which is still ongoing. We do not only see an outflow of workers as some return back to Ukraine to defend their country, but at the same time companies are experiencing disruption of business and supply chains as many occupiers based in industrial parks in the Czech Republic have clients and suppliers in Ukraine. Simultaneously, companies are pulling out of Russia, in some cases also from Belarus and, in the future, we may also see higher number of companies reshoring from China. On the other hand, Czech labour market may benefit from the influx of women from Ukraine.”
