Total market size of modern industrial and warehouse space in Central and Eastern Europe [1] walked 59 million m in the first half of this year2. In 12 months, 7.6 million cubic meters were delivered2 space, the regional market grew by 16%, and the current status of another 5 million m2. Czechia is the second largest market in the region with 19%, followed by Poland with 52%. The demand for premises is down, but there is a new trend of nearshoring. Current data pin real estate consulting company Cushman & Wakefield.
Ji Kristek, partner and head of leasing of industrial areas and shopping parks, Cushman & Wakefield: The fundamentals of the industrial real estate market in Central and Eastern Europe remain strong. Nearshoring has given rise to complexity in the region’s supply, especially in the automotive industry, engineering, the removal industry and the consumer goods industry.
In April 2023, the size of the market for industrial premises in CEE reached 59 million m2new in the first half of the year there was 3.8 million m2. Status: 5 million m2 currently under construction2. The Czech Republic accounted for about one-fifth (19%) of the region’s total capacity and no more than a quarter (27%) for new construction. The largest market is Poland with 52% based on market size and 42% based on new construction.
Graph 1: Industrial premises in CEE by country
Source: Cushman & Wakefield
Note: Bulgaria includes only the Sofia region
Vacancy is still low, but growing
On an aggregate level, there is a gradual decline in the number of spaces that are pre-leased during construction: at the end of the first half of 2021, it was 61%, this year 44%. In the Czech Republic and Romania, it was mn, piblin 39%.
In the first half of this year, the demand for space thus decreased: the total volume of leased space (gross realized demand) in the region decreased by 29% year-on-year. This was mainly due to a large decrease in Poland (-39%), Estonia (-32%) and Slovakia (-23%). In other countries of the region, on the contrary, demand increased, in Bulgaria even by 136%.
Even after a slight upward correction, the vacancy rate remained in the single digits in Hungary, Poland and the Czech Republic in all markets, and even below 2% in the Czech Republic and Bulgaria in particular.
At the end of the first half of the year, the highest level achieved in Germany compared to Poland was achieved in all markets of the region with the exception of Romania. The highest rate by 35% – increased in Poland, where it is now 6.50 euros/m2/msc. In the Czech Republic, the price is 7.75 euros/m2/msc, which is still the highest in the region.
Graph 2: The highest achieved volume in the region
Source: Cushman & Wakefield
Note: Bulgaria includes only the Sofia region
Nzk investin activity, construction in the hands of two developers
Similar to the entire real estate market, there is still low investment activity in the logistics and industrial real estate sector. The total volume of investments in industrial real estate in Central and Eastern Europe decreased by 45% in the first half of this year. It was 630 million euros, which is a third (29%) of the total investments in the traditional sector of commercial real estate in the region in the given period.
Apart from Bulgaria, in the region, income from industrial real estate in this sector increased by 25 percentage points in Romania and by 150 percentage points in Estonia.
Ji Kristek, partner and head of leasing of industrial areas and shopping parks, Cushman & Wakefield: However, investors in the industrial and logistics sector in the region should be attracted in the coming period by a healthy vacancy rate, strong demand caused by nearshoring trends and a slowdown in development activity.
The logistics and industrial real estate market in the CEE region is therefore highly consolidated: in terms of current construction (over 55% in the first half of this year), the two international companies Panattoni and CTP, which are active in all countries as well as in terms of leasing, have a large share here. The Prologis company stands out, its parks accounted for 18% of the total gross realized demand in the region in the first half of this year.
Chart 3: According to previous developers in CEE for new construction in the first half of 2023
Source: Cushman & Wakefield
Trends in CEE reflect European development
In the rest of Europe, the trends in terms of soft activity are very similar: a recent survey by Cushman & Wakefield European Logistics & Industrial Update [2] shows that the markets as a result of high economic uncertainty and the doors of companies and the consumer are returning to the pre-pandemic level of activity, even when the volumes of realized demand are still much higher than before the pandemic, especially in smaller markets (including many in CEE).
In Europe as a whole, the supply of free space is still limited, which causes growth to be slow, although not as record-breaking as in previous years.
The same salary for the whole of Europe, thus continuing the decrease in the investment volume, will lead the investor to stabilize the new price levels. The decompression of the import is not going to slow down, and activity is slowly coming back thanks to the two investors in this market.
Ji Kristek, partner and head of leasing of industrial areas and shopping parks, Cushman & Wakefield: The economic uncertainty continues to affect the door of companies and the consumer, so assuming that the activity of Germans in Europe will remain subdued for the rest of the summer year and the rest of the year, it will not be possible to increase the optimism of companies. The availability of free space will be limited in the future, because the developers will slow down their speculative construction, which is evidently the case in CEE now. Growth should slow down slightly from 2024, even when the European markets remain positive.
[1] The CEE-6 region, which includes the Czech Republic, Slovakia, Poland, Hungary, Romania and Bulgaria
[2] www.cushmanwakefield.com/en/insights/european-logistics-and-industrial-investment-market
Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is the world’s leading provider of real estate services for Germans and property owners. It employs approximately 52,000 people in 400 locations in 60 countries of the world. In 2022, the company’s revenues reached 10.1 billion dollars, thanks to activities in the field of building management, property and project, rental, investment market, real estate and other services. So many industries and businesses have been awarded for their original corporate culture and strengths in DEI (Diversity, Equity and Inclusion), ESG (Environmental, Social and Governance), etc.
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