Compared to last year, activity in the first quarter of 2014 was only on an average level. The gross take up (which includes also prolongations of existing tenants’ lease contracts) was recorded at a level of 37, 718 sq m which is only half of the previous quarter and below the average level of all quarters of last year. On the other hand, the net take-up meaning the leasing-up of space that was previously vacant was at a level of 19, 437 sq m which was higher previous quarter. This is a positive sign, because developers are leasing vacant space to new tenants or to existing tenants that are expanding.
Construction activity was limited in the first quarter of 2014. Only one development in Zilina was completed where PointPark Properties completed approx. 6,000 sq m of industrial space. The project was built on a speculative base, however half of the space was leased before completion of the construction.
The vacancy rate in Q1 2014 decreased slightly to 4, 0 % from 4, 3 % in Q4 2013. Despite the fact that demand was active in Q1/2014, the majority of the requirements were satisfied by space that was either newly constructed or in space where tenants recently moved out and hence before the vacant space was actively marketed. The 4% vacancy rate represents the lowest in the whole of Central Europe and is significantly below a generally accepted “healthy” level of approx. 10%. For comparison the vacancy rate in Central Europe is approx. 10%. Since new construction is still limited at this moment, it is expected that the vacancy rate will decrease further in the following quarters. These trends were confirmed by statistical analyses prepared by Cushman & Wakefield.
"It is positive that tenants are able to sign new contracts and occupy the vacant space. Almost 20,000 sq m of new lease contracts were closed on the market in Q1 2014. On the other side, development companies are not delivering new space to the market resulting in a significant decrease in the vacancy rate. Low vacancy rates usually motivate development companies to start construction. We do expect that the level of new construction will increase again during the following quarters in order to satisfy demand on the market,” says Martin Balaz, Head of the Industrial team at Cushman & Wakefield.