Low demand, increasing vacancy rate and decreasing rents are the main characteristics of the second quarter of the year. A higher number of requirements comes from companies considering relocation into new, modern premises whilst benefitting from favorable lease conditions.
Relocations represented 20% of take-up in the second quarter. Total take-up in Q2 2009 reached 86,200 m², representing a 22% increase compared to the first quarter of 2009, but a 64% decrease year on year, according to the latest Logistics Market Update presented by DTZ.
According to DTZ 180,000 m² of new supply was delivered from April till June, which increased the vacancy rate to almost 17 %. "Due to a halt in speculative development the vacancy rate is expected to decrease as demand will be surpassing new supply," comments Martin umera from DTZ. Relocation of tenants into new premises is and will be the main feature of the industrial property market. The new projects offer the same or better financial and technical conditions compared to the older premises.
Total stock of modern logistics and industrial space amounted to 3.5 million sq m at the end of June. Major completions in the second quarter included VGP Park Horní Počernice (more than 77,000 m²), CTPark Pohořelice PO4 (31,181 sq m), VGP Park Olomouc (16,400 m²) or CTPark Brno South SA1 (14,500 m²). There is currently ca. 55,000 m² of modern class-A warehouse space under construction, from that approximately 40,000 m² should be completed by the end of the year. Almost 80 % from that has been pre-leased already.
The highest share of take-up (34%) comes from VGP projects, followed by Panattoni (21%), while Outulný Group signed the biggest transaction in Q2 2009 (14,680 m²) with DHL. The highest take-up in the second quarter was recorded in the Greater Prague area. "Total take-up in 2009 is expected to reach around 250,000 sq m compared to almost 720,000 sq m in 2008 and almost 1 million sq m in 2007, which is a major decrease. "A drop in demand from manufacturing companies is visible, within the logistics segment demand from end-users is dominating over 3rd Party Logistics providers," comments Martin umera.
Prime headline rents have slightly decreased to 3.6 4.3/m2/month depending on location. Headline rents are bottoming out and will be stabilizing in the second half of the year.
Source: SMART Communication