Prague,
21
December
2017
|
14:34
Europe/Amsterdam

CBRE predicts extraordinary demand for industrial and office space in 2018

Summary
  • Investment: 2017 is set to be the second strongest year in terms of investment volume on record. CBRE expects to see around EUR 3.3 bln EUR transacted. CBRE is monitoring almost 40 transactions with a total volume in excess of EUR 2.4 bln which could be closed in 2018.
  • Office: CBRE forecasts take-up will once again exceed 300,000 sq m in 2018. There is no new development scheduled to be delivered in the Prague city centre in 2018.
  • Industrial: With consumer spending growing, retail has become the prime driver of the market. CBRE expects new XXL logistics warehouses to come to the market.
  • Retail: CBRE expects prime retail rents to be amongst the fastest growing of any sector (3.7% in 2018). For the first time no new shopping centre will be opened.

CBRE, the world leader in commercial real estate services, has released the Czech Republic Real Estate Market Outlook 2018 for investment, office, industrial and retail sector.

Richard Curran, Managing Director CBRE
We expect the Czech economy to remain strong in 2018. Although wage costs are rising, companies are continuing to expand, which is good news for the office and industrial sectors. As wages are rising faster than inflation, people have more disposable income which will have a positive impact on the retail sector.
Richard Curran, Managing Director CBRE

Investment:

Currently, CBRE is monitoring almost 40 transactions with a total volume in excess of EUR 2.4 bln which could be closed in 2018. The investment market should be clearly driven by office and retail transactions which together could account for 88% of total investment volume. 60% of 2017 investment transactions was transacted in Prague, but in 2018 we expect to see an increased volume of transactions in Prague, which could account for 70% of the total volume. We forecast that investment volumes in Prague in 2018 will be driven mainly by the office sector, whereas more than 50% of total investment volumes in the regions will be derived from shopping centre transactions.

Office:

We forecast take-up will once again exceed 300,000 sq m in 2018. Currently, there is more than 300,000 sq m under construction in twenty five projects, out of which almost 190,000 sq m is scheduled to be delivered to the market in 2018. There is no new development scheduled to be delivered in the city centre in 2018. We currently observe a trend of longer leases in cases where a company is leasing 2,000 sq m and more. Growing importance of quality and advanced technologies, economy of the building, green certification is very important mainly for global corporations (LEED, BREEAM or DGNB). Intelligent buildings, sufficient facilities for runners and cyclists, or even a shared gym for employee use, support of electromobility will became also very important to meet needs of employees.

Industrial & Logistics:

E-commerce, in particular, is a demand accelerator as the handling of a product ordered online can require up to three times more space than a conventional sale. Logistics companies (largely serving retail) and companies from the automotive sector are expected to remain as the predominant drivers of demand. In terms of new supply, CBRE expects that in 2018 there may again be around 700,000 sq m delivered to the market (the same amount as in 2017). CBRE expects to see expansions of existing parks. Besides that, CBRE sees the growing importance of locations in the North-West of the country such as Usti and Labem, Karlovy Vary, Most, Chomutov, Cheb as the Czech Republic has been increasingly popular with companies serving Germany and Western Europe.

Retail:

In 2018 CBRE expects that for the first time in a reporting period no new shopping centre will be opened. On the other hand, we expect, two new shopping centres and one expansion to start construction: Borislavka (10,000 sq m) and OC Letna (13,000 sq m) in Prague and Avion Shopping Park in Brno (phase 3) (13,200 sq m). Additionally CBRE will see two specialized centres – Outlet Arena Moravia (phase 1) (11,700 sq m) in Ostrava and Prague The Style Outlet (20,000 sq m) – opening in 2018.

 

Real Estate Market Forecast for 2018 in numbers

      

INVESTMENT

Share on total volume

32%

Retail

56 %

Office

5%

Mixed use

3%

Industrial

Yields will be decreasing in all sectors

OFFICE

350,000 sq m

Take-up

7.3%

Vacancy

190,000 sq m

New Supply

288,000 sq m

Under Construction

20.50 EUR/sq m/month

Prime Rents

INDUSTRIAL & LOGISTICS

900,000 sq m

Take-up

3.3%

Vacancy

700,000 sq m

New Supply

-

5.50 EUR/sq m/month

Prime Rents

RETAIL

-

-

0 sq m

New Supply

36,000 sq m

Under Construction

140 EUR/sq m/month

Prime Rents Shopping Centres

 

About CBRE

About CBRE

CBRE Group, a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2016 revenue). The Company has approximately 75,000 employees and serves real estate investors and occupiers through approximately 450 offices worldwide (excluding affiliates). CBRE offers a broad range of integrated services including project management; property management; investment management; valuation; property leasing; strategic consulting and research and consulting. In the Czech Republic, CBRE has almost 350 employees and manages nearly 70 commercial premises with a total area nearly 1.2 mil. sq. m. Read more at www.cbre.cz.