Cushman & Wakefield's European Logistics Market Update for H1 2024 examines the current state of the logistics and industrial market. To read more about the European Logistics Market download the report.
Czech Republic Industrial Update Highlights H1 2024:
- Demand for industrial space is stabilizing across Europe, and the Czech Republic is no exception. Instead of a decline in demand, we observe a leveling off to pre-pandemic levels. In the entire Central and Eastern European region, demand is driven by manufacturing companies, especially from the automotive industry. In the Czech Republic, we have already recorded several transactions within the framework of “nearshoring,” and further demand continues to come in.
- Developers have started to behave more cautiously in new construction and avoid speculative projects, especially in unproven locations. The volume of projects under construction has decreased by approximately 25% compared to the record second quarter of 2022.
- The vacancy rate in the Czech Republic rose to 2.9% at the end of Q2 2024, which is still one of the lowest rates in Europe. In the Czech Republic, we have seen an increase for the third consecutive quarter. The increase in vacancy is not only seen in newly completed industrial halls but also in units in existing industrial halls. However, demand for space still exceeds supply, so we do not expect a dramatic increase in vacancy.
- Rents in premium locations in the Central and Eastern European region have stagnated or slightly decreased. One reason for this decline is the significant rent growth during the pandemic period, when rents in the Czech Republic increased by more than 80%, and now there is some “correction” or “stabilization” of rents.
- Industrial real estate gained popularity during the pandemic and became a sought-after investment product. The situation in the Czech Republic is different. One reason is that owners of industrial properties do not offer their properties for sale, and thanks to long-term lease agreements and almost full occupancy, they maintain these properties.
- In the second half of 2024, an increase in investment transactions into industrial real estate is expected on a pan-European scale, and we observe a similar trend in the Czech Republic. Negotiations are already underway for the sale of some significant industrial projects. Investors are particularly interested in “core-plus” and “value-add” products in desirable locations with a view to rent growth.
- ESG standards play an increasingly important role in investor decision-making, even in the Czech Republic. According to another study by Cushman & Wakefield, Sustainable Logistics – Navigating Change in European Logistics Real Estate, investors are willing to pay an average of 19% more for properties with ecological certifications or other sustainable features.
