Slovak Industrial Market Q1 2025: Declining Demand and Rising Vacancy Gives Tenants the Upper Hand

The beginning of 2025 brought significant changes to the Slovak industrial market. Following a strong 2024, the market cooled noticeably in Q1. Gross take-up reached 62,800 sq m – representing a 42% year-on-year decrease. Net take-up dropped to 37,400 sq m, as renewals accounted for 40% of all transactions. The largest decline was seen in the automotive sector, traditionally one of the market’s key demand drivers.

Vacancy rose to 5.45%, with expectations of further increase in the coming quarters. Two new buildings were delivered to the market, totalling 39,500 sq m. However, the pipeline under construction stands at 321,200 sq m, with only 53% pre-let, indicating lower confidence and cautious expansion strategies from tenants.

The launch of the new Industrial Research Forum (Cushman & Wakefield, 108 RE, Colliers, and iO Partners) brought much-needed transparency. It also introduced a unified methodology for data collection and market monitoring.

In Q1 2025, the market shifted from a landlord-favourable environment to a tenant-driven one. Landlords are increasingly offering incentives, such as one month of rent-free for each year of lease, especially in older buildings. Flexibility is also rising as 3-year leases are becoming more common compared to the standard 5-year agreements.

Prime rent increased to €5.60/sq m/month, and the prime yield held at 6.00%, the lowest among commercial asset classes.

Overall, market sentiment is cautious. Expansion activity is minimal, large transactions are nearly absent, and most deals are smaller and conservative. In the context of continued economic uncertainty, this cautious approach is expected to persist throughout the coming quarters.