The Belgian family company VGP – developer, manager and owner of top logistics and semi-industrial real estate – operates in 19 European countries and, since 1998, also in the Czech market.
Thanks to a fully integrated business model, capabilities and many years of experience, the company is able to implement projects from the purchase of land to the construction and asset and real estate management. Originally a construction company, VGP now strategically focuses on the realization of large multi-tenant industrial parks. David Plzák, VGP Country Manager for the Czech Republic, answered Development News’ questions for us.
The interest in logistics and warehouse space has increased significantly due to the development of e-commerce during the Covid era. How did this period affect your business?
There has been a significant increase in demand for warehouse and industrial space and a corresponding increase in rental prices from the start of Covid until now. Which, on the one hand, brings an advantage when renting or renegotiating existing buildings, but on the other hand, it generates great pressure for the acquisition of new land. We can see a critical shortage of them in many locations, which causes a price rise for those still available. In the last year in particular, we have also registered an almost rocketing increase in prices of construction work compared to previous years, which forces us to be very cautious.
Is it still possible to find land for construction in attractive locations? And what locations do you find attractive?
VGP generally wants to have parks near motorway exits and near larger cities. The offer in the Czech Republic is already quite limited in such locations, and possible opportunities are associated with significant complications during preparation, either in terms of permitting processes or induced investments. Apart from that, we want to focus more and more on the revitalization and renewal of the territory, the so-called brownfields, where we can make use of the advantageous position inside the cities.
What is the occupancy rate in your properties? To what extent can you afford to build speculatively? And are clients actually interested in speculatively built halls that are without built-to-suit modifications?
The total occupancy of our parks in the Czech Republic is very close to 100%. We have potential applicants for the vacant spaces, and we expect that these will be filled soon. Our long-term strategy is not to implement halls purely speculatively; we always want to have a certain level of pre-letting. We register cases where the client rents the hall in order to be sure that he will not lose the premises, and only then deals with possible modifications. We therefore also register a great demand for halls without specific modifications.
How do you think have the standards of logistics and industrial objects changed in recent years? Is it still possible to build halls today without some kind of certification? Do you have experience with green roofs, or with rainwater collecting, etc.?
In recent years, certification (BREEAM, LEED, etc.) has become a necessity for new buildings. Without a certificate, such a building would be very difficult to rent. Many potential clients, especially larger international corporations, have certification requirements as part of the specification. All our new projects have a BREEAM certificate or are undergoing the approval process. In Germany and the Netherlands, for instance, where VGP has its parks, we implement green roofs and install solar panels on a large scale. We are also planning all this here in the Czech Republic.