Speculative constructions for logistics or industry have many advantages. As Peter Jánoši, executive director of P3 Logistic Parks for the Czech Republic and Slovakia, points out, the fixing of construction costs at a certain time can be considered as such. This is especially true in the period when, due to external factors and inflation, costs may fluctuate over time and affect the performance of the investor's project. The disadvantage is the risk of unpredictability of the market, for example, the fact that the hall will be occupied by a tenant at a different time than the investor anticipates in his project.
No special modifications
Currently, the P3 company tries to build primarily when they have occupied real existing capacities, but in specific cases they do not rule out speculative construction either. It brings greater competitiveness on the development market and, at the same time, readiness to respond more quickly to market demands. For which clients is speculative construction suitable?
According to Jánoš, the construction in question is more suitable for those who prefer storage without special modifications of the premises, which would require changes in valid building permits and thus the reopening of permit processes. As he points out, they are not exactly the shortest in Slovakia.
"The current situation on the market presents a number of challenges for the developer, which he tries to respond to. Today's approach is more cautious than a year or two ago, and the willingness to go into speculative construction is limited," explains Jánoši, adding that the new construction law should bring clearer rules in decision-making from the perspective of the hierarchy of participants, as well as the time required for individual stages of the approval process . The whole process should be speeded up and made more transparent.
However, the price of money, the level of interest rates, the development of inflation and, of course, the prices and delivery times of building materials have a more decisive influence on the willingness to build speculatively. The construction permit and approval process is also essential, especially in terms of the time impact on project implementation. "Therefore, we strive for a sufficient number of prepared locations with the appropriate permits, the so-called Landbank, which will give us the opportunity to respond flexibly to market inquiries."
The concept of speculative construction is not foreign to the Contera company either. They perceive it as construction, when the developer implements the construction project without knowing the final tenant. This means that the project is processed to a certain general stage and awaits the client's specification in order to be completed according to it. As noted by Matúš Hasák, the development manager of Contera, the basic advantage for the developer is that he can realize the client's project earlier, because he already has the foundation of the building on which he "writes" the final specification of the project according to the client. A disadvantage may be the fact that the given basic characteristic of the rough building already excludes some potential clients who, for example, have different requirements for the dimensions of the building.
"Our constructions that have already been completed or are being prepared in Slovakia have been and are being carried out for a specific majority client, to which additional tenants can be added in some projects," notes Hasák, adding that their effort is currently to implement specific projects for specific clients, but in the future so-called they do not completely rule out speculative construction in some types of projects. And for which companies are such buildings advantageous? According to Hasák, there can be many reasons, but one of the main ones is the effort to shorten the implementation time of the client's final project. The prerequisite is that the client is satisfied with the already prepared basic part of the building, the location and, of course, the price.
Estimation of trends
For the GLP company, partial speculative construction is a very common form of development of projects focused mainly on logistics. Such a development is in demand on the market, because it gives logistics companies in particular the certainty that they will be able to use the property on time, which is very important for their business.
According to Jan Palek, director of GLP for the Czech Republic and Slovakia, other advantages are the possibility to expand the developer's real estate portfolio when he has the capacity and finances to implement it. As he points out, in the Czech Republic and Slovakia, the permitting processes are very long, so for many projects it is difficult to get a client for a project that will be built in more than a year. However, the start of construction usually acts as a clear signal to potential buyers, as a result of which projects are leased even before construction is completed. "That's what happened in GLP Park in Senec near Bratislava or near Brno in Holubice, where we have the last few hundred square meters left for rent."
At the same time, however, it also points to the disadvantages of speculative construction. One is the need to make changes in the project during fully underway construction, if the client's business requires it. This makes the subsequent rent more expensive and may also lead to an extension of the completion date. For many companies, however, it is more important to be sure of handing over the premises in the time and quality they choose. In addition, not every developer can build a specul