Better access to capital and strong tenant demand drove a 170% year-on-year increase in the development of new industrial space in the Czech Republic last year, Cushman & Wakefield has reported.
Better access to capital and strong tenant demand drove a 170% year-on-year increase in the development of new industrial space in the Czech Republic last year, Cushman & Wakefield has reported.
The latest research by C&W's Czech industrial team indicates 300,000 m2 of new industrial property space was delivered last year compared with 108,000 m2 in 2012. The increase was driven primarily by strong long-term demand for modern industrial halls and better access for developers to capital.
C&W's report supports the claim made in January during the latest PropertyEU European Logistics Briefing that the Czech market is being unjustly overlooked at the moment by many international real estate investors.
'There is approximately another 200,000 m2 in the pipeline, most of which has been pre-leased. Developers trust the market - eight of them are currently building, whereas in previous years not more than two or three developers were active at a time. We expect the development of modern industrial space to be strong this year,' said Jaroslav Kaizr, head of C&W's industrial letting team.
CTP, VGP, D+D and Panattoni were the most active developers in 2013. In the past few months, they have been joined by Pointpark Properties (P3), Prologis, Segro and Gemo. All these developers are currently active and involved in the construction of projects in, as well as outside, Prague. P3 delivered 8,000 m2 of built-to-suit space in the Czech Republic over the last 12 months and it sees the country as an important growth market, the investment briefing heard.
Kaizr: 'In comparison with previous years the developers have easier access to capital and stable demand stimulates new construction. We do not expect speculative development though in 2014. The construction of 200,000 to 300,000 m2 per year is proving to be balanced and sustainable in the long term. With such an amount of new development, the Czech industrial market will retain a sufficient amount of modern space available for lease and remain attractive for companies seeking quality for a good price.'
The C&W report shows that companies leased 1.22 million m2 of modern industrial and logistic space last year. 'This is a fluctuation rather than a regular occurrence. The reason behind the high figures is the prolongation of contracts from the strong years 2008 and 2010, which expired last year. Based on our calculations, balanced take-up of modern industrial space ranges between 700,000 and 750,000 m2 leased per year,' Kaizr explained.