CEE-6 INDUSTRIAL MARKET Q1 2025
The CEE-6 industrial and logistics market entered 2025 with cautious optimism as global economic uncertainties continued to influence tenant behaviour and development decisions. While leasing activity showed mixed results across the region, the structural shift toward tenant-favourable conditions became more pronounced, with developers increasingly prioritizing pre-committed projects over speculative development. The market fundamentals remain robust, supported by nearshoring trends and supply chain diversification strategies, though pace of recovery varies significantly between countries.
- Poland maintains regional leadership despite tenant caution, recording 1.11 million sq m of leasing activity (up 16% year-on-year) but with renewals reaching a record 56% share of total take-up, reflecting companies’ reluctance to expand or relocate amid global geopolitical uncertainties, while new leases and expansions declined 20% year-on-year to 486,000 sq m.
- The Czech Republic demonstrates the strongest demand growth, with gross take-up surging 152% year-on-year to 511,600 sq m, driven primarily by logistics and transportation companies (62% of demand), while net take-up increased 36% year-on-year, showcasing the market’s resilience and continued appeal for distribution activities serving Central European markets.
- Development pipelines contract to historic lows, with Poland's under-construction volume falling 41% year-on-year to 1.37 million sq m—the lowest since September 2017—while speculative construction represents just 41% of the pipeline, the smallest share since the early pandemic period, as developers prioritize pre-committed projects amid financing constraints.
- Vacancy rates rise due to speculative completions and space returns, with Poland reaching 8.5% (up 1.0 pp quarter-on-quarter), Hungary’s Greater Budapest climbing to 10.5% (+2.53 pp, QoQ), and Slovakia increasing to 5.45%, while Czech Republic maintains the tightest market at 3.1% and Romania shows moderate increase to 5.6%.
- Rental markets face downward pressure with increased incentives, as Poland's effective rents decline 15-25% below headline rates in oversupplied regions, Hungary's Greater Budapest prime rents fall 5.1% year-on-year to €5.60/sq m, and Slovakia shifts toward a tenant-favorable market with enhanced incentive packages, while Czech Republic maintains stability across all major markets.
