Czech industrial supply wakes up

Czech industrial take-up was 136,000 in QII 2011, a fall of 3,000 sqm from Q1. More significantly, however, the level of supply rose from 14,000 to 47,800 sqm, confidence that’s resulting from a vacancy rate of just 8.1%, the lowest figure since 2007.

“The vacancy rate is closely connected with rents. If the vacancy rate drops below 10 percent, the limited supply may result in pressure for price increases. And this started to happen in selected locations in the first quarter of this year. Over the recent months, though, rents have started going up across the board and in almost all of the Czech Republic,” says Jaroslav Kaizr, head of the industrial letting team at C&W’s Prague office.

VGP, HB Reavis and Portland Trust were the main contributors to the new supply. C&W points out that take-up was actually much higher in 2010 over the first two quarters, hinting that the easy availability of empty space was behind the result. “In terms of demand, 2011 will be lower than the previous year, and this is also because of the shortage of available space that is starting to appear in certain locations,” says Kaizr.

The moral of the story would appear to be that healthy take-up is fine, but only low vacancy rates can push supply.

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