Room for industrial development in Czech Republic: C&W

Development activity, and redevelopment in particular is rebounding in the Czech industrial sector, according to Cushman & Wakefield.

More than 43,000 m² of modern industrial space was built in the third quarter, considerably more than in the whole of the first half (30,000 m2). However, development is much lower than in the same period in the preceding two years. In Q3 last year, the figure came to 142,000 m² and to 82,000 m² in Q3 2010.

While only two developers launched new halls on the market in the first half of the year, competition is currently growing and more companies are building, the property adviser said. Despite that, the overall volume of development is lower than in the preceding years.

'Our expectations regarding the decrease in new development are being confirmed. Hence, the refurbishment of existing halls and parks has been and will be a major factor. Refurbishment requires significantly lower financial resources while posing a lower risk, especially in well-established locations,' said Jaroslav Kaizr, head of Cushman & Wakefield’s Industrial Letting Team.

'The life expectancy of modern industrial halls is roughly 15 to 30 years. Halls built at the beginning of the century are reaching the limits of their lifetime and owners have to invest in them in order to keep pace with competition. Improved lighting, insulation and repaired floors are essential if older halls are being leased, and even so, occupiers request a lower rent than with newer halls. International companies, in particular, are increasingly asking questions regarding green elements in logistic parks,' Kaizr says.

Only local specialists CTP and VGP completed new halls in the first half of the year; Goodman made a foray into the supply of new halls in the third quarter with its park in Mladá Boleslav; and Contera built a new hall in Teplice. Raiffeisen - Leasing have recently started construction in Brno, and VGP and CTP are also building there, Cushman & Wakefield noted.