Czech Industrial Market Holds Up

Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

PRAGUE-The industrial property market in the Czech Republic saw a rise of 60,000 square meters. in rented space in the first half to around 401,000 square meters, said realtor Cushman & Wakefield in a report. While the volume was expected due to the development pipeline, there was surprise that rents held up quite well since supply rose by 10% against last year’s first half.

In the second quarter, for the first time, leased property of 172,000 square meters moderately exceeded newly developed premises of 166,000 square meters, confirming a forecast slowdown of speculative development projects. “The figures document the inertia existing on the market where projects both planned and commenced last year were completed in the first half of this year,” said C&W’s Ferdinand Hlobil. “Demand .. still remains fairly high, which keeps the Czech Republic in second place after Poland on the central European market.”

However, the non-lease ratio is rising, and showed a national average of 16.7% from 13.8% at the close of 2008. The increase results from a higher development rate in past years as well as from the release of older logistic parks. In terms of regions, the non-lease ratio increased the most in the Moravian and Silesian region in 2Q09, up to 29% from 8% in 2Q08 – and in the Plzeň Region up to 25% from 13%. Figures for the capital, Prague, showed only a slight rise to 15%.