The impact of the global economic downturn was already visible in the industrial market in the Czech Republic towards the end of 2008 and this development continued through the first quarter of 2009, according to CB Richard Ellis.
In Q1 2009, take-up decreased for the fifth consecutive quarter. It reached 82,800 m², representing a decrease of 31% q-o-q. It was only half of the Q1 average take-up in the last three years.
CBRE recorded the lowest quarterly number of deals since the beginning of 2006. In Q1 2009, only sixteen leasing transactions were closed. However, we witnessed several large transactions over 10,000 m², which caused the average deal size to increase to the level of 5,200 m².
In Q1 2009, a significant amount of 243,600 m² of modern warehouse space (16 industrial halls) was completed, which is substantially above the three-year quarterly average of 163,000 m². However, new completions were primarily the consequence of the construction boom and development of these projects had already begun last year. We expect most of the 2009 pipeline to be completed in H1 2009.
Space under construction
At the end of Q1 2009, only 158,000 m² of modern warehouse space was under construction, representing a significant decrease from 775,000 m² in Q1 2008. We have not recorded the start of any new warehouse space constructions in any of the regions. On the other hand, most developers own additional industrial land plots with building permits obtained and are ready to start construction immediately after a prelease is signed.
Net Absorbtion & Vacancy
In Q1 2009, the net absorption of 196,500 m² did not keep up with the high amount of completions, which resulted in the vacancy rate growing by 1.1 p.p. to 16.6%. However, we believe that the increase in the vacancy rate is only short-term as we expect only another 160,000 m² of warehouse space to be delivered to the market through the end of 2009, with 60% of this space already pre-leased.
Filip Kozák Head of industrial agency adds: "The high amount of new completions was primarily the consequence of the construction boom and development of these projects had already begun last year. We have not recorded the start of any new warehouse space constructions in any of the regions. On the other hand, most developers own additional industrial land plots with building permits obtained and are ready to start construction immediately after a pre-lease is signed."