The industrial and logistics vacancy rate in Czech Republic decreased for the fifth consecutive quarter to less than 9% from 10.4% in Q4 2010. Around 322,500 m² of modern warehouse space was vacant at the end of Q1 2011.
"We believe that vacancy could still slightly decrease during the course of the 2011 as the majority of supply pipeline has been pre-leased already. This will put pressure on prime headline rental levels that are expected to increase slightly towards the end of the year," forecasts Lenka Sindelarova, Consulting & Research Manager at DTZ.
The sharpest quarterly drops in vacancy were recorded in Central Moravia (from 22% to 10.6%) and in Moravia-Silesia submarkets (from 12.7% to 6.1%). On the other hand vacancy increased slightly in West Bohemia (from 9.1% in Q4 2010 to ca. 11.2% Q1 2011) and in Central Bohemia and the D1 Corridor submarket (from 10.2% to 11.7%).
Total stock of modern developer-led logistics and industrial space amounted to 3.617 million m² at the end of Q1 2011. New supply in Q1 2011 reached 18,500 m². The largest completion in Q1 was Building 3 in D+D Zelená Louka Pardubice (10,600 m²). There is currently ca. 203,600 m² of modern class-A warehouse space under construction, of which 97,000 m² is under construction and leased in CTPark Brno Phase II.
In Q1 2011, gross take-up including renegotiations recorded a 44% decrease q-o-q reaching 146,800 m², on an annual basis gross take-up decreased by 19%. Net take-up, excluding renegotiations, totaled 106,400 m² (a decrease of 56% q-o-q and 17% y-o-y).
Net take-up in Q1 was the highest in the South Moravia (32%), followed by West Bohemia (24%) and Greater Prague (17%). The highest gross take-up was recorded in Greater Prague totaling 35%, with renegotiations of existing leases prevailing in this submarket and reaching 63% of the total take-up.
End-users and manufacturing companies were most actively leasing or renegotiating space in Q1 2011 (35% each), followed by 3PL companies (28%).
The average deal size decreased to ca. 4,700 m² compared to 7,300 m² in Q4, the median deal size reached ca. 2,800 m² as opposed to ca. 3,800 m² in Q4. DTZ recorded 32 deals in Q1 2011 compared to 36 deals in Q4 2010.
"It is not expected that total take-up will reach levels seen last year due to limited available space and longer periods of lease negotiations on built to suit projects," adds Martin Sumera, Senior Industrial Agent at DTZ.
Headline rents for modern logistics space have remained stable q-o-q at 3.6-4.3/m²/month in Prague, in the regions rents vary between 3.6-4.25. DTZ forecasts that prime headline rents will increase towards year-end to around 4.40/m²/month driven by a shortage of available stock in certain submarkets.