2022/Q3 INDUSTRIAL PROPERTY MARKET REPORT –⁠ SLOVAKIA

In the third quarter of 2022, the industrial market slowed down slightly due to still rising energy prices and other costs. Developers are also more cautious in development of new industrial parks as rising prices of rents are not always sufficient to make up for initial investment. At the beginning of 2023, we expect cooling of the market, foreign investors are already more cautious and in anticipation of how the situation on world markets will develop. An opportunity will be created for local developers and larger companies with a stable background. How long this unstable period will last is difficult to estimate.

• The total area of ​​premium industrial premises for lease reached more than 3,576,000 sq m at the end of September.

• Currently, a total of 278,212 sq m of new industrial space is being built, of which 49% is in the Bratislava Region. It is still true that speculative development projects in Slovakia have receded and have been replaced by pre-signed projects with clients. The nearest free units will be available only after the completion of new projects at the end of 2023.

• The vacancy rate has steadily declined from 5.70% in Q2/22 to 4.47% in Q3/22. The forecast for next year is that the Bratislava and Trnava regions will gradually have an insufficient warehouse space to cover the unceasing demand of tenants.

• Total leasing activity in Slovakia in the 3rd quarter of 2022 reached more than 198,000 sq m, while net take-up was 127,000 sq m. Prime yield is 5.20%.

The market continues to be under pressure from inflation, interest rates and rising rents. However, vacancy rate continues to decrease rapidly, as the demand from new tenants is still high and companies with a stable background expand. We can expect developers to build less and less speculatively, what will open up investment opportunities for local developers in the near future, says Dominika Ukropcová, Research Analyst from 108 AGENCY Slovakia.

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