KAREL STRANSKY: SERBIA IS GOOD FOR LOGISTICS AND MANUFACTURING OF ALL KINDS

08. Feb 2023
Photo: Colliers (Karel Stransky)

During his prolific career, Karel Stransky, Head of Corporate Industrial Advisory at Colliers EMEA Corporate Solutions, has traversed the globe in pursuit of the best industrial real estate market solutions for his clients' needs. Practically, there is no part of the global market that he does not know on both the macro and micro levels, which instills great confidence in clients when they make capital decisions in their business. He joined the Colliers team in 1996, when the Colliers agency for industrial real estate was founded in the Czech Republic, which he led successfully for 13 years. In 2009, he became Managing Director of Colliers Czech Republic, and since 2011, he has been part of the Colliers EMEA Corporate Solutions team in London, where he uses his valuable experience and market knowledge to help clients from the industrial and manufacturing sectors find the right location or facilities. Behind him are numerous realized projects in the EMEA region, the USA, and Asia, which include several million leased or purchased square meters of industrial buildings and hundreds of thousands of hectares of land. We met Karel in Belgrade during one of his numerous business trips and took the opportunity to ask him where the industrial real estate market is going in the coming period.

You have been in the industrial real estate business for more than 20 years and have really amazing experience. What do you see as the greatest changes in this sector during those two decades, and what trends will dominate in 2023?

Across the last two decades, the industry has changed substantially, although there are significant differences depending on where in Europe you are. I would emphasize the following aspects: a focus on energy efficiency, a shift from owner-occupants to lessees, and both larger and more customized buildings. I believe that improving buildings' energy performance will be one of the key concerns of the years to come, not only due to reducing their carbon footprint but also their dependency on fossil fuels and overall cost.

As the head of Corporate Industrial Advisory within Colliers EMEA Corporate Solutions, you actively manage industrial and manufacturing-related projects in 17 countries in Europe, the USA, and Asia. What precisely do you provide to clients, and what services do they need most?

We support our customers end-to-end during the whole building life cycle: evaluating site portfolios, selecting the right country, region, or city, adopting the appropriate building financing and acquisition model, managing and monitoring building delivery, and disposing of assets that are no longer needed. Currently, we spend significant time with our customers evaluating their existing and future locations with respect to recent disruptions in supply chains and geopolitics caused by post-pandemic and post-war dynamics.

Given the experience you have managing transactions all over the world, what real estate markets do you find most favorable in the industrial sector? Which market at the moment is the best for what type of industry?

 

Industrial market perspectives are closely related to the growth of the economy and a transparent business environment; the markets do not like conflicts, tensions, and wars. When it comes to our remit within EMEA, there are a few regions worth considering, though each has its own set of challenges. Central Eastern Europe, alongside Portugal, is still attractive for logistics and more sophisticated and automated production, in particular its less developed pockets in east Poland, Slovakia, south Hungary, or east Romania, as well as Lithuania—obviously, geopolitical risk is more acute the closer to the Ukraine border you are.

Given the long tradition of engineering expertise and work ethics in former Yugoslavian production centers, the Western Balkans, particularly large countries like Serbia, are good for emerging consumer-related logistics as well as manufacturing of all kinds. The issue is obviously the perception of ongoing tensions among various ethnic groups, the efficiency of public governance, and a fuzzy political position when it comes to the geopolitical attitude of Russia.

Northern Africa, especially Morocco, Egypt, and potentially Tunisia, are emerging countries for low-cost manufacturing and eventually consumer-related logistics and distribution. The challenge here is distance to EU markets and a perception of cultural barriers towards Islamic and Arabic communities.

You come to Belgrade from time to time. Where do you see the greatest potential of the Serbian real estate market in attracting more international companies to be based here?

Over the last ten years, international companies inevitably recognized the potential of Serbia, and it clearly became a very different country when it comes to industrial markets. Looking to the future, I would refer to the previous paragraph: from talking to my customers, I understand that the perception of ongoing tensions among various ethnic groups, the efficiency of public governance, and the fuzzy political position when it comes to the geopolitical attitude of Russia are the key blocking factors, at least when we consider corporations from the Western hemisphere. I suspect that the Chinese or Indian companies are not that sensitive here.

Although you are part of the London Colliers team, you are practically still based in your home country, the Czech Republic. You also have great experience in the Czech market since you have also been Managing Director of Colliers Czech Republic. What are the greatest challenges that the Czech real estate market is facing in this turbulent period?

My business activity in the Czech market has been limited to a few projects in recent years, so my perspective may not be comprehensive. From the occupier’s standpoint, similarly to most of Europe, the market offers very little new space due to massive demand and limited new development in the last three years; labor markets are exhausted; and rents, energy, and construction costs have escalated. Although the building owners, on the other hand, appreciate rental growth and their unique dominant position in almost any negotiation, they also feel the impact of value dropping, rising construction costs, and borrowing. It’s likely that there will be less growth in the market since rents will remain higher than in the past and inflation pressures do not disappear; the extent of growth will most of all depend on consumer spending sentiment across the whole European region.

By: Gordana Knežević Monašević

Photo: Colliers

 

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