Development of the industrial market in Czech republic in the third quarter of 2009 has slowed down.

15 Oct, 2009,

DEVELOPMENT OF THE INDUSTRIAL MARKET IN THE CZECH REPUBLIC IN THE THIRD QUARTER OF 2009 HAS SLOWED DOWN

The supply of the industrial space completed in the Czech Republic in the third quarter of this year has slowed down significantly compared with the second quarter. This is confirmed by the statistics prepared by Cushman & Wakefield, which indicate that overall, 13,816 m² of modern industrial space for rent was built from the beginning of July to the end of September, whereas this was as high as 166,583 m² in the second quarter of this year. Thus the new projects for the third quarter of this year have decreased by 85 percent year-on-year from last year’s 162,803 m². The significant drop in construction has been caused primarily by the developers attempting to fully lease the remaining vacant space.

“The construction of industrial property in Central Europe will drop by about 80 percent in the latter half of this year. And the construction in the first half of next year may be zero or close to zero. In terms of real figures, we are talking almost 30 billion crowns that will not go to the Central European construction industry in the next 12 months,” says Ferdinand Hlobil, Head of Central European Industrial Department at Cushman & Wakefield.

Take up have also encountered a major drop, as the area of industrial space rented and handed over to tenants in the Czech Republic between July and September 2009 was 40 percent lower (81,834 m²) than in the third quarter of last year (135,898 m²). The predicted development in the fourth quarter for the total amount of leases for 2009 should be 500,000 m², reaching the relatively high figures equal to 2006.

“After almost 9 months of this year, statistics show the first indications of a clear decrease in the industrial property sector. We have already seen a similar drop in the US and UK more than 18 and 12 months ago, respectively. This shows the domino effect and the delay in the real impact on economy and statistics,” adds Ferdinand Hlobil.

The vacancy rate in the third quarter decreased compared with the second quarter of this year, stabilising at 16.14 percent, which means a decrease of approximately 4 percent. The Olomoucand Plzeň Regions currently exhibit the greatest amount of vacant space, with vacancy rates hovering around 33 and 26.4 percent, respectively.

Development of supply and take up in the Czech Republic

Source: Cushman & Wakefield, October 2009

The market shares of developers also changed compared with this year’s second quarter. ProLogis has a 56% market share accounting for the largest percentage of growth (as opposed to 4% in Q2), with VGP holding the imaginary second position with a 26% market share (as opposed to 58% in Q2), and CTP with 8% (compared with 23% in Q2).
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