The industrial market is experiencing a period of long-term stability. This is good news both for occupiers and for owners of industrial halls. The rents have oscillated between EUR 3.5 and EUR 3.7 per sq m over the past two years.
The ratio of available (vacant) stock also ranges at a healthy rate of around 10 per cent. The shift and expansion of manufacturing premises from Western Europe continues – Poland and the Czech Republic which border on Germany have primarily profited from this phenomenon; the two countries have been the driving factors in the region over the long term.
“Amazon, the Internet retailer, recently decided to place a warehouse in the Czech Republic for its goods which have been returned by German customers. Cheaper labour force and property costs, together with expansion potential of Amazon business into the CEE region, have been so attractive that they can compensate for the costs of transporting the goods from Germany. A stable environment significantly eases long-term planning for firms,” says Ferdinand Hlobil, Head of the CEE Industrial Team at Cushman & Wakefield.
Moreover, Amazon is considering yet another vast expansion into Central Europe. There is talk of plans to build warehouses to supply both Western and Eastern Europe.
“So far this year we have witnessed a number of large strategic transactions take place with over 500,000 sq m leased in Q2 alone in Poland. Retailers planning for future growth, 3PL’s improving their supply chain and global manufacturers setting up new or expanding existing footprints are driving the industrial market and we expect this trend to continue as we head into 2014,” says Tom Listowski, Partner, Head of Industrial Department in Poland and CEE Corporate Relations at Cushman & Wakefield.
Companies have leased more than 1.5 million square metres of modern industrial halls over the first six months of the year. In the same period last year, the figure stood at 1.2 million sq m. There is a positive mood on the market. The highest leases were recorded in Poland (almost 880,000 sq m in H1 2013) and in the Czech Republic (470,000); these two countries have together met 85 per cent of the entire demand. Increased interest has been noted especially in respect of the Czech Republic – it has almost doubled compared to the first six months of last year.
New development in the CE region is still moving forward and we have seen approx 260,000 sq m of new construction in the first six months (370,000 sq m in the same period last year). “New construction activity will be one of the strongest in European comparison this year again, and this trend is still likely to continue in the following years,” says Ferdinand Hlobil.
“Most of the space has been constructed by five developers only. Especially in some regions, the local developers have been successfully competing with the global ones (CTP and D+D Real).
It is important in view of market stability that both international and local players get involved,” adds Ferdinand Hlobil.
We expect the CE Industrial market to grow at similar levels, with stable vacancy and rental levels. The stable CE market will likely attract both, new occupiers as well as new developers.