• The volume1 of enquiries has increased by one million sq m in five years
• Space is requested mainly by manufacturing companies
• Demand for larger premises is growing
• Halls in the regions are also in demand
Interest in industrial and logistics space in the Czech Republic was at a record high in 2023, up 50% from 2019, which means one million sq m in demand. The growth in interest continued in the first four months of this year. The majority of enquiries are coming from manufacturing companies, with interest in other regions in addition to the established locations in Prague, Pilsen, Brno and Ostrava. The demand for larger areas between 10 and 50 thousand sq m has increased. However, the time from the initial enquiry to the signing of a lease agreement is lengthening, and so this interest will not be reflected in actual take-up until 2025. The real estate consultancy Cushman & Wakefield presents unique data based on its record of enquiries made by those interested in leasing space.
Interest in leasing industrial space reached record levels last year. Compared to the pre-covid year of 2019, it increased by more than 50%, i.e. by almost one million sq m in demand. In total, there were over 400 unique enquiries. The interest in this space is therefore unabated; its growth continues this year: in the first four months of the year alone, Cushman & Wakefield recorded over 100 leasing enquiries in the Czech Republic, totalling over 700,000 sq m.
Jiří Kristek, Head of the Industrial and Retail Warehousing Team, Cushman & Wakefield: "The statistics of the actually leased space (take-up) show a decline, whereas the interest in space is growing. However, this will only manifest in 2025, as the time from the initial enquiry to its realisation, i.e. signing a contract, is getting longer. Tenants now need more time to make a decision, with internal approval processes and the evaluation of different options from all angles playing a role. For example, when merging multiple production facilities into one site, this can take months, sometimes even years."
Manufacturing companies account for two-fifths of demand
The majority of enquiries in 2023 came from manufacturing companies: in total, they were interested in more than 1.3 million sq m of production space, which is 44% of the area in demand. Interest from logistics companies amounted to over 900,000 sq m of warehouse space, 32% of the total area. Before 2019, the demand of these two types of companies was balanced.
Chart 1: Demand by tenant sector
Logistics prefers motorway hubs, manufacturing heads to the north of the country
Same as in 2019, last year the greatest demand for space was in the established locations in Prague, Pilsen, Brno and Ostrava. However, while almost 75% of enquiries targeted these locations pre-covid, last year the figure was 55%. Sites near motorway junctions – D5 near Pilsen, D1 near Prague and the Brno area – are wanted by logistics companies. However, demand is increasingly heading to other regions as well – especially from manufacturing companies targeting the north of Bohemia and Moravia: the Ústí nad Labem, Liberec and Moravia-Silesia regions.
Map 1: Demand in regions by sector in 2023
Growing demand for larger premises
In the long term, the greatest demand is for space of 1 to 5 thousand sq m – in 2023, it accounted for 41% of demand. However, in the last two years, enquiries for larger spaces of between 10,000 and 50,000 sq m have increased, accounting for 25% of enquiries last year.
Jiří Kristek, Head of the Industrial and Retail Warehousing Team, Cushman & Wakefield: "Despite some stagnation this year, the Czech Republic can still benefit from its strategic location within the CEE region, good transport accessibility and experienced workforce. It is often on the radar of companies considering nearshoring, ie. moving their manufacturing activities closer to end customers. However, these decisions are usually made at the corporate level, so the real benefit for the Czech economy and the whole market is yet to come. An important factor that is already significantly affecting a substantial part of the real estate business is ESG regulation, requiring buildings to be adapted to the new parameters. Some companies already demand these standards and there are instances where they greatly influence the final decision to rent or buy a property."
1 For the purposes of this report, the terms 'interest' and 'demand' represent an enquiry for space to let. They are not equivalent to the term 'take-up', commonly used when tenants have already signed a lease agreement.
