Saturday, 15 March 2025
The Czech industrial and logistics real estate market is poised for substantial growth in 2025, with nearly 900,000 square metres of new space expected to be completed. This marks a notable shift following a sluggish 2024, when supply remained constrained and demand showed gradual recovery.
According to the latest quarterly survey from Colliers, the fourth quarter of 2024 saw limited new project completions, with only 106,700 square metres of new space delivered—the lowest figure in three years. For the full year, total new supply reached 517,900 square metres, representing a 45% decline compared to 2023. Despite this slowdown, total industrial space on the Czech market grew by 4.6% year-on-year, reaching 12.28 million square metres.
Looking ahead, 2025 presents a much more positive outlook, with 870,300 square metres of new space scheduled for completion. Additionally, a further 384,700 square metres are in the shell & core stage, potentially becoming available within the next three to six months. “Although the volume of completed space has remained below the long-term average, new construction and development plans have been on the rise for over a year,” said Josef Stanko, Director of Market Research at Colliers. He noted that there are currently 2.7 million square metres of projects that have completed permitting, with an additional 3.2 million square metres in various stages of approval. The total potential planned area stands at approximately 5.9 million square metres.
Vacancy Rate Rises, True Market Availability Higher
The vacancy rate in the Czech industrial market edged up slightly in Q4 2024, increasing by three basis points to 3.13%—its highest level since late 2020. However, sublease activity and shell & core projects waiting for lease agreements suggest that the real vacancy rate may be above 6%, aligning it more closely with trends in other Central European markets, where Poland’s rate is around 8-9% and Slovakia’s stands at roughly 5%.
“Throughout the year, sublease activity contributed to the vacancy rate increase. If we account for the approximately 3% vacancy ‘hidden’ in shell & core spaces, the actual availability of space in the Czech market is significantly higher than official figures suggest,” explained Stanko.
Demand Shows Signs of Recovery
Despite a year of weak demand, optimism is building. In Q4 2024, gross realized demand reached 438,400 square metres, bringing the annual total to nearly 1.45 million square metres. While this was the lowest level since 2018 and 20% below the five-year average, net demand remained strong, accounting for 61.3% of the total volume—consistent with the long-term trend.
Among the largest Q4 transactions, the biggest deal was a pre-lease agreement for a 52,000-square-metre facility at CTPark Brno by electronics manufacturer Hitachi Energy Czech Republic. Other major deals included a 21,300-square-metre lease renegotiation at Prologis Plzeň II by consumer goods company VAFO and a 21,100-square-metre renegotiation at Prologis Park Prague Airport with an undisclosed distribution firm.
Rents Remain Stable, Tenants Gain Bargaining Power
Industrial rents in the Czech market have remained stable, with prime rents holding steady at €7.00–€7.50 per square metre per month for three consecutive quarters. However, landlords are increasingly offering more attractive incentives to tenants as they gain greater negotiating power. Office rental rates range between €9.50 and €12.50 per square metre, while service charges typically fall between €0.75 and €1.00 per square metre.
Market Sentiment Improves Despite Economic Uncertainty
While the challenges of the past year have not fully subsided, there is growing confidence in the Czech industrial real estate sector. “Despite economic uncertainty, the market continues to demonstrate resilience,” said Stanko. He noted that infrastructure investments are expected to alleviate logistical bottlenecks, while strong commitments from major manufacturers underline the sector’s stability.
Although competition from neighboring countries is reshaping market dynamics, sentiment is improving after a period of pessimism. With nearly 900,000 square metres of new space set to enter the market in 2025, the Czech industrial real estate sector appears well-positioned for a year of renewed expansion.
Source: Colliers Czech Republic
