Both the development and take-up of industrial parks in Central Europe is continuing and slightly accelerating in comparison with last year, according to research from Cushman & Wakefield. The appetite for investing in commercial properties is also increasing, with a shortage on the supply side making buyers willing to pay more. This trend is most obvious for logistic and production facilities.
“The period of low interest rates has lasted a very long time. This restricts the range of investors’ opportunities for depositing and increasing their funds, and commercial properties present a good opportunity. The economy is growing, companies are expanding and e-commerce is developing. As a result, the demand for logistic and production properties is growing, in effect increasing their value,” commented Ferdinand Hlobil, Head of Cushman & Wakefield’s CE Industrial Team.
The market in Central Europe is undergoing diversification. Players are gradually differentiating in terms of their market roles. Developers focus primarily on developing new projects. They include companies such as Goodman and Panattoni. The next group is companies that build parks and then retain their ownership or expand their portfolios by acquiring existing facilities. Examples include CTP, P3 and Prologis. The third group is investors who prefer acquiring completed parks to building them – one such company is Logicor; it bought parks in Poland and the Czech Republic this year.
Companies leased more space than developers newly built in the first half of this year. As a result, the ratio of vacant space continues to decrease, averaging 6.8 percent in Central Europe. This is the lowest figure in the last nine years.
“The decrease is most prominent in Hungary where the vacancy rate decreased by two percentage points to the current 13.7 percent within six months. If Hungary keeps this pace up, it could reach a healthy vacancy rate of about ten percent around the turn of the year,” Ferdinand Hlobil said.
More than 600,000 sqm of new stock was built in Central Europe in the first half of this year (versus 520,000 sqm in the same period last year). 2.1 million sqm was leased (versus 1.9 million sqm last year). In total, there is 18.5 million sqm in the region at this point, with Poland approaching the ten million mark and the Czech Republic having reached five million square metres recently.
Central Europe’s industrial market is strong and stable. The inflow of production and logistic companies from Germany continues, and we expect further expansion of e-commerce firms. This applies to both domestic players and e-shops coming from the West. Chinese and other Asian manufacturing companies will come as well, as proximity to automotive manufacturers is of strategic importance to them.
“Rents have been stable for almost ten years now. Where rents decrease, this is due to bulk discounts: manufacturing companies coming to the region rent significantly greater areas than the case was ten years ago. We expect this trend to continue,” Ferdinand Hlobil concluded.
