Market in Minutes | Czech Republic Industrial Market Q1 2023

During the first quarter of 2023, the total national stock of modern industrial space intended for lease passed the 11 million sq m mark.
The potential for new space is now greater than ever with the pipeline remaining at exceptionally high numbers. At the end of Q1 2023, the volume of space underway (or in shell & core finish) came close to 1.4 million sq m, equating to 12% of total existing industrial space. To put this into perspective, it represents a 19% increase from Q1 2022 and nearly an 88% increase from Q1 2021.
At the end of March, vacancy rate stood at 1.9% countrywide (+25 bps q-o-q) and 0.8% in Prague (+23 bps q-o-q). Even though the overall rate increased, 7 out of 14 regions still suffer from vacancy lower than 1%.
Demand for industrial space continued its downward trend during this quarter. Gross leasing activity recorded a 50% y-o-y decline but remained roughly flat compared to the previous quarter. With its 374,400 sq m, however, it represented the lowest level since the end of 2020. Net demand then recorded a 10% increase on a q-o-q basis and a 29% decrease y-o-y, totalling 280,200 sq m.
Rental rates have stabilised at high levels. From 2020, industrial headline rents went up by 55% in the core regional locations and by 78% in Prague.