MARKET IN MINUTES | CZECH REPUBLIC INDUSTRIAL MARKET Q3 2023

Although the year-to-date volume of new completions is 27% down y-o-y, the total stock of modern industrial space intended for lease maintained a 2% quarterly growth rate, being in line with its long-term trend. After three quarters, new supply (including acquisitions of existing space) totalled 685,900 sq m and the total stock expanded to 11.8 million sq m (+10% y-o-y).
The construction pipeline remained robust with 1.46 million sq m under development (or in shell & core finish) across the country. More than 60% of the total was already pre-leased and the remaining 582,600 sq m were available for lease.
Tenant activity is now coming into a period of slowdown with Q3 posting a significant drop in total and net demand. However, the strong H1 performance is maintaining the year-to-date volume above the pre-Covid 5-year average. Gross take-up for the first nine months of 2023 was just below 1.14 million sq m (-41% y-o-y) and net take-up totalled 684,300 sq m (-46% y-o-y). The manufacturing sector made half of the year-to-date net take-up. The number of net take-up deals signed so far this year was down by more than a third y-o-y.
The slowdown in leasing activity has also led to a slight increase of available space across existing properties, with the nationwide vacancy rate increasing to 2.2% in Q3 2023 (up 105 bps from a year ago).