A warehouse in an industrial building in the Czech Republic

Summary of Q1 2021 in the Industrial Real Estate Sector in the Czech Republic

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Record demand for industrial real estate, the highest volume ever of new lease agreements, and a further drop in vacancy rates. This is according to data published by the Industrial Research Forum regarding the commercial real estate market in the Czech Republic in the first quarter of 2021.

COVID-19 did not significantly affect the industrial sector in Q1, though it did contribute to the rapid growth of e-commerce and online ordering services.
Supply in Q1 2021 decreased by 57% compared to the five-year Q1 average.
About half of the space currently under construction is located in the Greater Prague area, Plzeň, and Moravia-Silesia.
A record of approximately 3–4 million m² of industrial space was leased in Q1, more than one-third of which were new lease agreements.
Vacancy rates dropped by 61 basis points compared to the previous quarter, aligning with a trend observed in Q1 2019.
Prime rents slightly increased to €4.80/m²/month.

Existing and New Warehouses

The total area of modern warehouses in the Czech Republic reached 9.17 million m² in Q1 2021. Approximately 68,000 m² were completed and delivered to the market in Q1 2021 across five new industrial parks nationwide. This represents a 65% decrease compared to the same period last year, and a 45% drop from the previous quarter. 94% of the newly completed space was already leased by the time of delivery.

The largest deal in Q1 2021 was in CTPark Bor (28,200 m²), fully leased by Primark. The second largest was a 25,000 m² lease in Noovovice Logistics Park, pre-leased by 3PL Hyundai Glovis. The third was in Panattoni Park Prague Airport II (8,000 m²), mostly leased at delivery by manufacturer Lindab.

Projects Under Construction

At the end of Q1 2021, the total industrial space under construction in the Czech Republic amounted to 557,500 m², representing a significant 83% increase from the previous quarter. Approximately 21% of the space is located in Greater Prague, 20% in Plzeň, and 15% in Moravia-Silesia. Construction began on 289,300 m² of industrial land during Q1 2021.

Completed Projects

During Q1 2021, total gross investment including renovations reached a record high of 765,600 m². Compared to the previous quarter, this is a 44% increase and a 147% increase year-over-year.

Renovations accounted for 61% of total activity in Q1 2021, a significant rise from 38% in the previous quarter.

Net leased space in Q1 2021 reached 299,400 m², showing a slight 10% decrease quarter-over-quarter, but a substantial 185% year-over-year increase. Net demand (excluding renewals) in Q1 was primarily driven by manufacturing companies (37%), followed by distributors (32%).

Largest Lease Deal

The largest industrial real estate deal in Q1 2021 was a renovation and expansion by e-commerce distributor Tchibo in Panattoni Park Cheb, totaling 102,200 m².

The two parts of this contract were the largest recorded in Q1 2021 for both a new lease and a renovation. Combined, they represent the second-largest transaction ever recorded in the Czech Republic. The second-largest new lease was a 28,000 m² pre-lease in VGP Park Viskov by a confidential retail company. The third-largest was a pre-lease in VGP Park Olomouc, where a building totaling 26,800 m² was leased.

Available Commercial Space

At the end of Q1 2021, the industrial vacancy rate in the Czech Republic dropped to 3.6%, a significant 61-basis-point drop quarter-over-quarter and a 78-basis-point drop year-over-year. There were 329,100 m² of modern industrial space immediately available on the market. The vacancy rate in Greater Prague was 2.0% in Q1 2021.

Rental Rates

Rental rates for industrial space in the Czech Republic in Q1 2021 slightly increased to €4.80/m²/month. Office space rents ranged from €8.50 to €9.00/m²/month. Service charges typically ranged between €0.50 and €0.65/m²/month.