Central European More Attractive as Industrial And Warehouse Prices Rise Worldwide
26 Apr, 2006, Prague
London's Heathrow area is the most expensive location in the world for industrial & warehouse space, with occupancy costs for one square metre of space at € 247 a year, according to this year's edition of Industrial Space Across the World, published by global real estate consultancy Cushman & Wakefield.
In second place comes Tokyo, with occupancy costs at € 156 . Dublin(€142/sq m/year) ranks third. The Czech Republic, with the price of €72/sq m/year, is 27th in the ranking, dropping two places from last year's 25th.
"All four Central European countries – the Czech Republic, Hungary, Poland and Slovakia – have recorded a fall in the ranking as against last year. This is owing to the gradual development of the market, the arrival of new players and international developers. Construction of new modern warehouses has resulted in a significantly extended supply of spaces to let. Tenants therefore have a better selection, whilst greater supply also serves to keep prices down," says Ferdinand Hlobil, Head of the Central European industrial team at C&W.
Hungary is the most expensive location in Central Europe, with the highest occupancy costs having climbed to €76/sq m/year. It is followed by the Czech Republic (in 27th place) and Poland, in 31st position at €63/sq m/year. The cheapest is Slovakia, which at €59/sq m/year has slumped from 27th to 38th place.
"The differences between Central European countries are not dramatic, amounting to a few euros, and the sequence in the ranking could rapidly change over the next few years. Truly substantial is the difference between first-placed London and other locations – London being almost €100/sq m/year more expensive than anywhere else. It is a unique location where air freight transport perfectly links up to other types of transport. Nothing similar exists in our country," Hlobil explains.
"We expect the situation in the Czech Republic to improve. However, a lot depends on Prague airport's capacity. Warsaw, for example, has recently given the green light to a plan for construction of a second airport approximately 50 km from the city centre which will not only help freight transport but also take a significant amount of pressure off the city in environmental terms," states Hlobil.
Industrial Space Across the World monitors the cost of occupying industrial & warehouse space in 122 key locations in 44 countries around the world. For each country, the most expensive location is included in the ranking.
On a regional basis, Africa & the Middle East had the highest rise in rents last year, followed by Asia Pacific, US & Canada, South America & Mexico and Western Europe. The only region that recorded a fall in prices was Central & Eastern Europe.
"In Western Europe there is continuing interest in locations with excellent market access and transport infrastructure, i.e. ports, airports and spaces along motorways. Availability of labour also plays an ever-increasing role when selecting spaces, however. To date, capital cities have been the centre of attention in Central Europe, but other regions are becoming an increasingly interesting alternative, primarily owing to greater supply of unoccupied land," says Hlobil.
In the Czech Republic there was an additional 210,000 sq m of modern industrial space to let last year.
At the present time, there is a total of 930,000 sq m of modern industrial space to let in the Czech Republic, with only two per cent of this remaining unoccupied. The most expensive rent stated in the ranking (€72/sq m/year, including service fees) was in Prague, whereas the average rents in other regions amounted to approximately €63/sq m/year (including service fees).
"This year we expect another boom in construction of modern industrial and logistics parks. Demand is high, but thanks to the new construction prices should maintain stable. We expect interest in the regions too, primarily Brno, Plzeň, Hradec Králové and Pardubice," Hlobil adds.
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