According to real estate services firm Cushman & Wakefield, almost half a million square metres (480,000 m²) of industrial properties came on stream in the Czech Republic last year. This is double the area built in 2005, when 241,000 m² of new industrial space was developed. This brings to 1.35 million m² the total of modern industrial space in the Czech Republic, whether for warehousing, logistics or light manufacturing.
"Last year was a record year, and not only in terms of new construction. We also registered enormous demand a total of 500,000 m² of modern industrial space was let, compared with 310,000 m² in 2005, representing an increase of 60%," says Ferdinand Hlobil, Head of the Central European Industrial team of Cushman & Wakefield.
"For tenants, the Czech Republic is attractive primarily thanks to its geographical proximity to Western Europe and Scandinavia. The Czech Republic also has much cheaper labour costs than other EU countries and relatively good infrastructure, while the country is experiencing relatively strong economic growth," explains Hlobil.
In Central Europe as a region, the Czech Republic, together with Poland, last year registered the greatest activity in the industrial property market.
"Tenants and developers are not just interested in the areas surroundings Prague. About 25% of last year's entire development took place in the Pilsen region along the D5 motorway in the direction of the German border. Moravia also registered strong interest, accounting for 37% of new construction," continues Hlobil.
This shift in activities from the Prague region to other areas of the country is closely tied to the growth of the market. Sites outside Prague have to date been undersized, but this is now changing. Their 'discovery' is a logical development given that, for example, Moravia is better connected to Central Europe than the capital.
"We expect this development boom to continue for some years. There is still tremendous potential in the regions that do not yet offer modern industrial space. These include, for example, the regions of Pardubice, Hradec and Ústí nad Labem, where several projects are currently in progress and which are expected to be completed over the next few years," says Hlobil.
In 2007 Cushman & Wakefield expects supply of about 350,000 m² of new industrial space in the Czech market, and take-up of about 400,000 m², with the vacancy rate remaining at less than 5%, compared with about 8 to 12% in Western Europe.
Source: Cushman & Wakefield