Industrial Research Forum Announces the Final Industrial Market Figures for Q4 2014
About Industrial Research Forum
The Industrial Research Forum was established by CBRE, Colliers, DTZ and JLL with the aim to provide clients with consistent, accurate and transparent data about the Czech Republic industrial real estate market. The members of the Industrial Research Forum share non-sensitive information and believe the establishment of the Industrial Research Forum will enhance transparency on the Czech Industrial market.
The Industrial Research Forum is pleased to announce the final Industrial Market figures for the fourth quarter of 2014.
Total developer-led industrial space in the Czech Republic totalled 4.9 million sq m at the end of 2014, while just a year ago it totalled just over 4.5 million sq m. This increase was caused by record new supply in 2014 totalling 356,000 sq m, the highest level recorded since 2009. Moreover 45,000 sq m of industrial space was added to the stock in buildings which were originally built for owner occupation, but were bought and offered for lease by developers and investors during 2014.New, record levels were also set for both net and gross take-up which makes 2014 the strongest year ever in the market’s history. Record demand was balanced by the high volume of new supply and therefore the vacancy rate remained stable.
Gross take-up (including renegotiations) amounted to 413,800 sq m in Q4 2014 according to Industrial Research Forum data, while net take-up totalled 356,200 sq m in Q4 2014. These figures were the strongest of all the quarterly results of the last year and reconfirms that the last quarter of the year is typically the strongest in terms of net take-up.
Gross take-up in 2014 (including renegotiations) amounted to 1,296,000 sq m representing an 11% y-o-y growth. Net take-up totalled 827,500 sq m, representing a 34% increase annually. Both gross and net-take up reached record levels. The share of pre-leased space accounted for 51% of overall annual net take-up, while a share of 33% was recorded for new leases in existing space. Extensions of existing, operating companies accounted for 16%. The share of renegotiations reached 36% of annual gross take-up which is 11p.p. below 2013 levels, thus confirming exceptionally strong new demand in 2014. The largest transaction of 2014 was a pre-lease to Amazon totalling 133,000 sq m of industrial space in the logistics park developed by Panattoni near to Prague Airport.
The Amazon lease agreement, which was finally closed in the last quarter of 2014, added to the already strong demand levels and contributed greatly to the record quarterly and annual take-up volume. This deal also belongs among to the largest industrial transactions in the history of the Czech market.“
The facility currently under construction for Amazon in Dobroviz will become the largest free standing industrial building in the Czech Republic since 1989,”states Pavel Sovička, Managing Director Panattoni Europe. “Our deal with Amazon confirms the exceptional significance of the Czech Republic as a strategic country for occupiers and at the same time proves a dynamic recovery of the Czech industrial real estate market,” adds Pavel Sovička.
The structure of new demand was also significantly affected by large requirements of other distribution (e-commerce and retail) companies throughout 2014. In addition to Amazon, Primark as well as Czech e-tailers Mall.cz and Alza.cz contributed to making distribution companies the main driver of annual net demand, accounting for 55% of the total. Production companies accounted for 28% and logistics companies for 17%. When looking at the five year average statistics, the results show that production companies were the main driver of new demand over the mid-term with a 40% share of net take-up, while distribution and logistics companies accounted for 31% and 29% respectively.
Despite record take-up, the vacancy rate in the Czech Republic registered a slight quarterly increase of 32 bps to 8.2%. In annual terms, the vacancy increased by 26 bps. The registered vacancy rate is in line with the two year average and as such, reflects stability, indicating a healthy balance between supply and demand levels. In Prague, the vacancy rate decreased by 194 bps y-o-y to 7.1% in Q4 2014. In the regions (excluding the Prague region) the vacancy rate increased by 168 bps to 8.9%. The difference between the vacancy rates in Prague and Czech regions is a result of Prague outperforming the regions. Prague accounted for 50% of net take-up in 2014, whilst the Prague stock accounts for less than 40% of the overall country stock.
In terms of volume, there were just over 400,000 sq m of modern industrial premises available for immediate lease at the end of Q4 2014. The largest portion of these premises can be found in Prague, followed by the Pilsen and South Moravian regions.
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.