According to the results of the 4th quarter of 2022, companies in Slovakia and the Czech Republic have to deal with a jump in lease indexation, lower customer consumption, growth in service fees and, of course, increased energy costs.

In addition, the costs of bank guarantees for tenants have increased dramatically, when 4-7% interest on the amount is not unusual, and is combined with the stricter requirements of developers for the credibility of clients. The European Central Bank also plans to gradually increase interest rates. In the end, industrial premises may be unavailable for some interested and existing tenants, regardless of the location. 108 AGENCY in the Czech Republic recorded an active demand for new leases or relocation opportunities to Slovakia or Poland, where clients can still obtain more favorable commercial conditions.

The transformation of the industrial premises market, which 108 AGENCY predicted during the entire second half of last year, has occurred. Already in the last quarter of 2022, efforts to sublease part of the premises, especially those used by e-commerce entities, were evident. However, the declining consumption of households will be reflected more significantly in the next months in the vacancy rate, respectively in the greater movement of tenants from this segment.

Tenants who decided to completely leave their premises were flexibly replaced by others. This is also why the described situation has not yet been significantly reflected in the vacancy rate of unoccupied premises - it rose slightly at the turn of the year from 4.47% in Q3/22 to 4.85% in Q4/22.

The total area of ​​premium industrial premises for lease reached more than 3,704,000 m2 at the end of 2022.

Currently, a total of 205,170 m2 of new industrial space is being built, of which 35% is in the Bratislava region. It is still true that speculative development projects in Slovakia are receding and starting to be replaced by pre-signed projects with clients. Therefore, the next larger volume of vacant units will only be available after the completion of new projects at the end of 2023. From the point of view of 108 AGENCY, occupancy of the newly completed premises will only be a matter of time, because despite the slight increase in vacancy, its overall level is still low and demand is strong.

This is also confirmed by the current analysis of 108 AGENCY: the total leasing activity in Slovakia in the 4th quarter of 2022 reached more than 140,000 m2, while the net take-up was 102,000 m2.

"In 2022, we saw an enormous increase in take-up – up to 72% compared to 2021. Despite the fact that approximately the same amount of new warehouse space was completed in both years - almost 300,000 m2, in 2022 we observe precisely because of the lease boom, reducing the overall occupancy rate by up to 2.30%. Despite the difficult economic situation in the world and the ongoing energy crisis, we have not yet observed a slowdown in the industrial real estate market in the fourth quarter of 2022," adds Dominika Ukropcová, Research Analyst at 108 AGENCY Slovakia.

However, the described cautious or even defensive strategies do not apply to all tenants. There are many who do not need to sublease unused areas - for example, with the vision of an early recovery of the economy. Signals of successfully weathering difficult times appear more and more often, even from respected institutions such as the International Monetary Fund (IMF) or Goldman Sachs. This is especially due to falling gas prices and economic recovery in China after strict lockdown during the COVID-19 epedemic.

More recently, lease agreements have also been concluded reflecting increased rents, mainly in fields which continue to grow rapidly. In general, however, it should be stated that, if tenants have the opportunity to prolong the lease, they try to maintain the conditions stated in their existing contracts. It is a given fact that newly concluded contracts are, at least from a financial point of view, less advantageous than the older ones.