In 2009, approximately 1.5 million sq. m of modern warehouse space was leased, a result comparable to the amount of space leased last year in France (1.6 million sq. m), whose market in this sector is considered the most developed in Europe.
– Compared to previous years, supply in Western Europe in 2009, like demand, was very low. Despite the decline in activity in the construction and leasing market, the Central European region achieved its third-best result in the last 10 years in 2009. The region’s advantage consistently lies in its cheaper and well-educated workforce, favorable location close to Western Europe, and the relatively high purchasing power of the population – said Ferdinand Hlobil, Director of the Industrial and Warehouse Real Estate team in Central Europe at Cushman & Wakefield. – Central Europe, compared to Western Europe, also has enormous potential for consumption growth, which further stimulates the development of the warehouse real estate sector. Logistics, warehouse, and industrial parks are the foundation of success for companies providing services in the fast-moving consumer goods sector.
Over the last 10 years, the volume of leased warehouse space has systematically increased, reaching its highest level in 2008. At that time, almost 2.8 million sq. m was leased. Last year, demand decreased to approximately 1.5 million sq. m of space. The greatest interest among tenants was recorded in Poland and the Czech Republic.
– In Poland, domestic small and medium-sized enterprises are more competitive than similar companies in other Central European countries. This applies to both manufacturers and traders. In the Czech Republic, however, foreign investments play a major role. As a result of the economic crisis, foreign manufacturing companies abandoned expansion in other countries – the Czech Republic was the first Central European country to feel a decline in interest in warehouse space as early as 2008. Other countries in the region recorded a decline in demand only last year – stated Ferdinand Hlobil.
The volume of newly built space in 2009 decreased by 35% compared to 2008. Last year, a total of 1.6 million sq. m of modern warehouse space was built in four Central European countries, which indicates a significant decline (from a level of almost 2.5 million sq. m in 2008). Last year, developer activity in Slovakia almost completely stalled, while in Hungary the amount of newly built space decreased by half. In Poland and the Czech Republic, the volume of new space delivered to the market decreased year-on-year by approximately 1/3. Currently, the average vacancy rate for newly built space in the Central European region is 16%, with the lowest in Slovakia (7%) and the highest in Hungary (19%).
– An acceptable, stable vacancy rate is about 10%. With a lower indicator, the resources of space for rent in some areas begin to clearly shrink, which encourages developers to resume investment processes – notes Ferdinand Hlobil. – In the last quarter of last year, the vacancy rate began to fall, and it is expected that this indicator will reach a level of about 12% this year.
Rents for prime space across the entire Central European region are currently around 3.5 EUR/sq. m/month. At the end of last year, upward pressure on prices was recorded in locations with a low vacancy rate, while in 2010 this may translate into slight increases in rental rates in attractive locations enjoying the highest demand. Currently, Central Europe’s resources total approximately 12 million sq. m of modern warehouse space.