Prague,
26
March
2015
|
09:47
Europe/Amsterdam

THE TOTAL AREA LEASED BY INTERNET RETAILERS TRIPLED IN THE CZECH REPUBLIC

A further 50 – 100,000 sq m is expected to be added this year

The amount of warehouse space leased by internet retailers tripled in the second half of 2014, with over 180,000 sq m of warehouse space being leased. This strong increase is driven by the market leaders (Amazon, Mall.cz and Alza.cz), with Amazon alone leasing over 130 000 sq m. By the end of 2014, Internet retailers had leased over 260,000 sq m of the total 4.9 million sq m of warehouse space available in the Czech Republic.

The e-commerce sector is a current driver of demand for warehouse space in the Czech Republic. In 2014, the area of newly leased premises to e-commerce amounted to almost one-third (27%) of take up and the amount of warehouse space leased in the second half of the year tripled. Demand from internet retailers accounted for 223,000 sq m of newly leased premises. The highest impact on industrial real estate take up was e-commerce retailers with a larger share than traditional retailers. This is in part due to internet retailers requiring larger leased premises when dealing with a similar quantity of goods.

Michal Bezděka, Head of Industrial Agency,  CBRE
“The essential features of a successful internet retailer warehouse is proximity to the customer and the shortest delivery times possible. In addition there is an increasing demand on the number of employees when compared to traditional warehouse storage. It’s no surprise then that 89% of the demand of internet retailers are in logistic parks in the immediate vicinity of Prague. The remainder of demand is in Brno, Ostrava and Plzen.”
Michal Bezděka, Head of Industrial Agency, CBRE

The strongest internet retailers in the Czech Republic in 2014 were Amazon, Mall.cz and Alza.cz. Other prominent retailers were parfums.cz, the German online supermarket Allyouneed.com and Digital Engines. The newly leased warehouse space shows the largest internet retailers have taken the largest amount of space. Claims on the effectiveness of the functioning of the warehouses are higher on the side of the internet retailers than ever before, as errors in storage and distribution lead directly to customer dissatisfaction which could affect customer retention.

The largest warehouse areas leased by Internet retailers in 2014

Logistic Park

Lessee

Area in m2

Panattoni Park Prague Airport

Amazon

133 000

Prologis Park Prague Jirny

Mall.cz

32 000

Prologis Park Prague Úžice

Alza.cz

13 000

CTPark Bor

Allyouneed

10 000

Prologis Park Prague Rudná

Digital Engines

7 400

VGP Park Brno

Internet Shop (Parfums.cz)

5 500

Source: CBRE

The Czech Republic attracts foreign e-commerce players mainly due to its location

For foreign Internet retailers leasing warehouse space in the Czech Republic for servicing Western markets an important factor is the advantageous position of the Czech Republic as well as the lower operating costs and sufficiently large labour market. Therefore, these retailers are a driving force for the majority of locations around Prague and Plzen, with Panattoni Park Prague Airport, Prologis Park Prague Jirny and Úžice and CTPark Bor benefitting the most.

Why do Internet retailers need more space than traditional retailers ones?

The range of products in e-shops is much larger than in traditional shops. At the same time individual items in stock must be freely and rapidly available in order to fill orders as quickly as possible. This impacts on the storing of goods, where storing them in pallets on high racks is not as efficient as storing them on lower shelves.

“This will reduce the quantity of the products stored on one square metre and therefore the density of the storage is reduced. There is a need to set up areas for services connected with filling particular shipments for customers, directly in distribution centres, thus placing additional demands on the size of the area under lease. Most Internet retailers allow customers to return goods, which in turn puts requirements on a bigger area, allowing them to handle the returned goods and place them back onto the shelves,” adds Michal Bezděka on the specifics of warehouse space of internet retailers.

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.