The regional office market is still more attractive, thanks to prices and space availability

Regional cities in the Czech Republic are becoming increasingly attractive as an alternative for investors looking for cheaper, high-quality office space outside of Prague. That’s according to the latest survey by Colliers, a leading provider of diversified professional services in commercial real estate and investment management. realized demand in Brno grew by 43% in Brno and by 127% in Ostrava. Compared to Prague, the prices are about one-eighth and half of that. Regional cities would be able to create a better offer of serviced offices, which are of particular interest to established companies on the market in connection with the development of hybrid work and the established hub & spoke or flex & core model.

Slow growth, you have a lot of empty space

After Prague, Brno is the second largest office market in the country. Thanks to its location, connected to the railway, it is valuable and stable, and due to the construction of new office premises, it has a very good chance to find a new German or signs that want to expand in R. A good start is that you have somewhere to go. From a long-term perspective, the vacancy rate is slowly but steadily increasing and currently stands at 12.8%, which represents an area of ​​88,300 m². explains Josef Stanko, a senior analyst from the Colliers company, adding that this long-term growth is to a certain extent due to the slight but steady development of the local modern office market, which is not being absorbed so quickly.

The total volume of new buildings in 2023 was 26,100 m², which is only slightly below the average for the five-year period. The construction of the Umavsk Center building was completed in 2023 at the latest. The steel structure added three floors to the original building built in 1915 and expanded the office space by 13,000 m². Currently, there is a 55,200 m² project under construction in zone 5. However, the year 2024 will be the year for new office premises, since only 2 of them are fully completed. On the contrary, the year 2025 should be optimistic from the point of view of new construction, as several of these projects are fully completed.

In Ostrava, the market for modern offices has been very stable for several years. The completion of the Organica building, which with its office size of 19,800 m² is one of the largest administrative projects in Ostrava, has taken the local market by storm. At the end of the 4th quarter of 2023, we recorded a total size of office space of 239,300 m², while the vacancy rate increased to 17.1%, mainly due to the movement of large Germans to Organika.

Office markets in other regional cities, such as Olomouc, st nad Labem, Hradec Krlov and Plzeň, remain without significant new activity. The modern office market here usually ranges between 30,000 – 100,000 m². The number of companies looking for quieter locations or expanding into this region is constantly growing. The lure is both the investment in renting out office space and the effort to access human resources. Unfortunately, companies here often face a problem with the availability of suitable office space, and it seems that the situation will not improve in the near future. comments Josef Stanko.

Growing demand, neither the price

The demand for office space in Brno is growing mainly due to the simultaneous expansion of IT centers and business services. realized demand for meziron rose by 43% (65,500 m²), which reflects the demand on the Brno office market, which in the last seven years has usually ranged between 40,000 and 60,000 m². Notable transactions include, for example, the renegotiations of Honeywell, Notino, Oracle and Atlas Copco.

In Ostrava, the market for office space is smaller than in Brno and Prague, with a limited number of transactions. In 2023, the gross realized demand for buildings reached 23,300 m², or 51% according to the renegotiation. Notable transactions include the renegotiation of Moneta Money Bank and Siemens.

However, the tender in Brno is not growing so fast. At the end of the 4th quarter of 2023, the price for the best office space, so-called prime, in modern offices was equal to EUR 16.50 m²/month. In Ostrava, it is cheap, according to our opinion, the average price is between 14.00 and 14.50 EUR, to Josef Stanko.

Limitation of competition in the flexible office market

The market with serviced offices represents a great potential in regional cities. It has slowly developed in Brno and Ostrava, where the CTP company operated by the Clubco brand has recently been represented. In other regional cities, mainly small local offices operate, often in very limited space, the capacity of which does not meet the demand of international companies.