The Prague Research Forum (PRF) publishes data on the office space market for the first quarter of 2024. PRF members are CBRE, Colliers, Cushman & Wakefield, iO Partners, Knight Frank and Savills, which share basic information about the office market in Prague in order to provide the most complete, accurate and transparent data on its development.
Offer of office buildings
The total size of office space in Prague is 3.9 million m2. In the first quarter, one office building was completed – Roztyly Plaza (21,700 m2) in Prague 4. In the same period, the construction of the PernerKa project (9,300 m2) in Prague 8, this is the first new construction started since the second quarter of 2022. There are currently 71,300 m under construction2, of which 82% will be completed this year. In 2024, 80,300 m should be delivered to the market2which is 18% less than in 2023 and well below the long-term average.
The majority of the current offer of modern offices (74%) consists of A-class buildings, while the share of the highest quality AAA-rated premises in the total volume of office premises reaches 20%.
Jan Babka, Head of Office Leasing, Knight Frank: “The situation on the Prague office market remains more or less stable as in previous quarters. “Tenants prefer to extend their contracts rather than move to new offices. Most companies wait and make their premises more efficient, they also negotiate flexibility so that they can react more quickly to possible changes in the market. The trend of moving from peripheral office hubs closer to the center still persists for some companies. They are thus trying to attract the workforce back to the offices with an attractive location and new premises.”
Realized demand
Total gross realized demand (including renewed contracts – so-called renegotiations – and subleases) reached a total of 108,700 m in the first quarter of 20242, which in a quarter-on-quarter comparison represents a decrease of 35%. Compared to the same period of the previous year, this is a 19% decrease.
Net realized demand reached 46,000 m238% less than the same period last year and 25% less than the previous quarter.
Renewals of existing contracts (so-called renegotiations) had the largest 57% share of the total realized gross demand. The share of newly leased premises and expansions in existing buildings accounted for 38% of the total gross realized demand, while pre-leasing of new offices under construction accounted for only 4%. The remaining 1% was made up of subleases of already rented premises.
The highest gross realized demand was recorded in the first quarter in Prague 4 (27%), followed by Prague 8 (25%) and Prague 1 (16%). The greatest demand for offices was realized by technology companies (17%) and companies from the financial sector (13%).
Significant leases
Among the most significant transactions of the first quarter of 2024, we include Trinity Bank in Trinity Palace in Prague 1, of which it is also the owner (7,600 m2), as well as renewal of the existing lease and expansion of Grant Thornton in the Parkview building (5,000 m2) in Prague 4 and the extension of the existing contract of Mattoni 1873 in the myhive building Palmovka 4 (3,800 m2) in Prague 8.
Fraction of vacant area and net absorption
Net absorption expresses the change in occupied office space on the market over the given period. Compared to the previous quarter, occupied office space increased by 8,900 m2.
Office vacancy in the first quarter of this year increased slightly by 30 basis points quarter-on-quarter to the current 7.5%, the vacancy rate was unchanged year-on-year. The total area of vacant offices reached 292,000 m2. The largest number of free spaces was in Prague 4 (65,900 m2) and in Prague 5 (60,700 m2). On the contrary, the least vacant area was in Prague 2 (5,600 m2) and in Prague 10 (6,400 m2), which, however, belong to small markets in terms of the total volume of offices. In percentage terms, the highest vacancy rates were in Prague 3 (19.8%) and Prague 7 (13.2%), the lowest in Prague 8 (3.0%) and Prague 10 (4.2%).
Rent
The highest achieved rent in the first quarter of this year rose slightly to EUR 27.50-28.00 per m2 per month in the city center, 18.00-19.00 euros per month2 per month in internal and 15.50–16.00 euros per month2 for a month in the outer parts of the city.
Classification of office space
The minimum requirements for inclusion in the total square footage of Class A or Class B modern offices include:
- Completion or renovation after 1990.
- The size of the leasable area is at least 1,000 m2.
- Available units are advertised accordingly.
When evaluating the quality of real estate, the following main categories with a brief description are included:
- Technical specifications – how well the property is built and equipped.
- Smart technology – the efficiency of the building, what smart technologies they use and what superior equipment the building offers.
- Location – availability, services and civic amenities near the property.
- Service and security – how the building is safe and managed.
- Parking – parking conditions with different requirements for buildings in the city centre, inner city and outer city.
- Age of the building – completion of the building or the last renovation.
- Subjective assessment – subjective assessment of Prague Research Forum members.
Each of the criteria has subcategories that allow for scoring, leading to a final property score. The maximum values of each category are as follows:
| Category | Share on the overall rating |
| Technical Specifications | 41% |
| Smart technology | 18% |
| Location | 9% |
| Service and security | 9% |
| Age of the building | 8% |
| Parking | 8% |
| Subjective assessment | 7 % |
Source: www.pragueresearchforum.cz
Tags: Developments Prague office market
-
