Reduction expected in logistics property market vacancy rate in 2010

2010-02-04

Overall rental business on the industrial and logistics market declined by about 45% in 2009 in comparison with the previous year, despite increasing demand after the first two quarters of the year. Last year, approximately 375,000 m² of industrial and logistics space was rented, with the Prague area remaining the most popular location.
More than half of the tenants were in the retail and logistics industry, according to Colliers International (CI). In terms of value, renegotiations and the renewal of existing leases accounted for some 15% of the total value of all transactions.
The first positive sign in this area noted in the final months of 2009 was a mere 1 p.p. fall in the vacancy rate in comparison with the beginning of the year. In some regions, however, the vacancy rate in the industrial and logistics arena remained high. For example, it remained at 62% in central Moravia, 31% in the Plzen area and 26% in north Moravia.
Proposed construction in the industrial and logistics field, which ceased completely in 2009, is not expected to start at all in 2010, according to CI. One exception is the developer VGP, which announced that it would, this year, build warehouse space in Horni Pocernice, near Prague, and in Dobrenice, near Hradec Kralove, although it has not yet obtained a tenant.
In 2010 demand for industrial and logistics space is expected to match that of 2009, according to CI. However, the year 2010 is expected to witness the most rapid decline in vacancy rates in the Czech logistics arena for several years and a levelling off of rents for such space.