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Logistics brings change to marketplace

Warehouse leases on rise across the country

By Adam Daniel Mezei
For The Prague Post
May 16th, 2007 issue

Harry Bunbury, a shed agent with DTZ, says some deals can take up to 16 months to hammer out.
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The logistics business is huge right now in the Czech Republic. Insiders say the country is quickly evolving into Central Europe’s leading transit hub, and big-name real estate developers such as CTP Invest, Parkridge, Pinnacle and ProLogis are constantly looking for ways to cash in on this growing trend.
Warehouses, or “sheds,” as they are known in the industry, appear to be the rage. In 2006, more than 500,000 square meters (5.4 million square feet) of new Class-A, developer-led warehousing space was introduced to the market, with 5.3 percent of it available for immediate occupancy, statistics show.
According to senior project manager Jan Svoboda, CTP’s logistics or light manufacturing clients will typically lease out a “CTPark” — a massive complex usually located along one of the country’s main transit routes — for 10 to 15 years. Last year alone, CTP leased out more than 450,000 square meters of space, Svoboda notes.
Among the Czech Republic’s numerous advantages are the country’s cheaper highway taxes and interconnected road infrastructure. But, while it’s popular, the Czech Republic still faces heavy competition from regional neighbors, a fact that has CTP eyeing plans to open two warehouse parks in Slovakia, in Žilina and Košice. Svoboda says these will service the country’s growing automotive sector and lower-cost labor pools, adding that CTP has also been taking a serious look at Hungary, Romania and Ukraine as places to do business in the East.
By all accounts, this market doesn’t look like it will be cooling down any time soon, which is great news for “shed agents,” industry experts who spend their days scouting out places to build new warehouse space.
“We will try to work with agents at the very beginning of the process, even before construction begins,” Svoboda says. Although developers often sign leasing deals without a middleman, an agents’ key expertise is highly valuable in sometimes pushing a client into a decision, according to the senior CTP project manager.
Pavel Sovička, a veteran shed agent at Cushman & Wakefield, says the average length between prospective clients expressing readiness to relocate to the Czech Republic to the signing of a lease with a developer can last anywhere between nine months to a year. Harry Bunbury, a shed agent with DTZ, adds that in rare cases a deal can sometimes take 16 months to hammer out. Meanwhile, Svoboda says, getting money together to build one of the CTParks can take up to five years.
Still, it seems like it’s highly worth it for companies that decide to stay. Developers labor hard to win their clients’ business by custom-tailoring spaces their clients will eventually occupy. The Bridgestone Tire Company’s move to the Czech Republic is a good case in point. The CTP project team visited the tire maker’s Zebrugge, Belgium, plant before the first spade hit the ground at the company’s CTPark location in Bor, west Bohemia, “to ensure there were zero surprises,” Svoboda says.
Agency representation has become a highly competitive field, with shed agents jockeying to work with top developers looking to build more warehouse space.
“It’s first to the post,” Svoboda admits. “Our ultimate responsibility is to the client, even though 30 percent of our business comes from repeat business and referrals from … agents we’ve had success with in the past.”
On the developer’s side, competition is determined by how close a developer chooses to build in the capital. “While ProLogis and Pinnacle might want to be outside of Prague, we’re already there,” Svoboda says. “Not to mention that we’ve been pushing further east as part of our clients’ gradual shift over into those regions.”
Prague’s significance as the building hub of choice has been on the wane, at least for the past half-decade, industry observers say.
“This is a country with a tremendous amount of land,” Bunbury says. “To be honest, some of the best parcels of it are out in places far away from the capital, so that’s where developers are sending most of the action.”

Adam Daniel Mezei can be reached at specialsection@praguepost.com


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