Prologis, a global leader in logistics real estate, completed two new buildings in the Czech market last year, totalling more than 20,000 sqm, and recorded a 22% year-on-year increase in signed contracts. By the end of the year, the company had leased space to a total of 110 customers, with retail, e-commerce and 3PL remaining the primary demand drivers.
"Demand for premium warehouse space in strategic locations has long outstripped supply, putting significant pressure on both developers and customers. Current trends in the global and regional supply chain suggest that this demand for space in locations with high quality infrastructure will continue to grow in the Czech Republic," says Martin Baláž, Senior Vice President, Head of Asset Management for Central Europe at Prologis.
One of the key trends shaping the market in recent years, is nearshoring – the relocation of production closer to end consumers – a development that is also affecting the Czech Republic. According to the 2024 Savills Nearshoring Index, the Czech Republic is the second most attractive market for industrial manufacturers to move their production from more distant locations. This is due to a combination of excellent accessibility to individual European markets, relatively lower costs and resilience. "The Czech Republic is almost ideal from a nearshoring perspective, mainly due to its strategic location in the heart of Europe. In recent years, there has been a growing interest in the Prague-West area as well as Pilsen, which serves as a bridge between the Czech Republic and Germany. This makes it especially attractive for the industrial manufacturing and automotive industries," says Anna Jůzová, Senior Leasing Manager Prologis Czech Republic. Near Plzeň, Prologis completed a state-of-the-art facility of over 15,000 sqm last year, now serving as the Central European base for Toyota Tsusho Europe. Another project, the modern DC3 building in Chrášťany, offering more than 5,000 sqm of space, providing tenants with quick access to the center of Prague and a short commute to the airport.
E-commerce driving further growth
"A unique feature of the Czech market is the relatively high level of online shopping penetration, the highest among Central and Eastern European countries – which naturally fuels demand for warehouse space, particularly in densely populated areas," says Anna Jůzová. According to available European retail data, e-commerce penetration in Europe currently stands at around 16%, with the Czech Republic exceeding this figure. This rising trend places increasing pressure on available warehouse space. Prologis Research estimates that every 1% increase in e-commerce penetration creates additional demand for 2 million sqm of warehouse space across Europe.
Sustainability is not the prerogative of new projects
Prologis focuses globally on long-term ownership and management of individual properties. Each year, the company invests significant amounts not only in the Czech Republic but also worldwide to modernize its existing portfolio, striving to meet its ambitious goal of achieving net-zero emissions by 2040. "Virtually every new project today incorporates the latest energy-efficient solutions and advanced technologies. We aim to demonstrate that sustainability and cost efficiency are not exclusive to new buildings. With the right investments, even older properties can meet the latest standards—often without major operational disruptions," says Anna Jůzová. She adds, "We implement sustainable projects across our portfolio. Our key project last year was the installation of five high-performance heat pumps at DHL's largest distribution center in the Czech Republic, a 100,000-square-meter facility located in Prologis Park Prague-Jirny. This initiative was the culmination of a long-term collaboration to enhance the building’s energy efficiency and overall sustainability, significantly reducing its reliance on natural gas heating."
In the coming period, the company plans to focus both on further developing its existing portfolio—where it sees great potential for modernization—and on new construction projects. "We will continue investing in our existing parks while further expanding and developing our locations around Prague," explains Anna Jůzová. While Prologis has completed several speculative projects in recent years, the company intends to prioritize build-to-suit (BTS) developments moving forward.
"The popularity of build-to-suit developments continues to grow among customers, as they are inherently better suited to their specific operational and storage needs. From the very start of construction, we work closely with the customer on every aspect. For us as a developer, BTS construction is also highly beneficial, as it carries a much lower risk of vacancy. By closely collaborating and reaching agreements with specific customers, we can develop properties in a way that ensures long-term satisfaction for both parties," Jůzová concludes.