Prague’s office market, supported by dynamic expansion in the flexible workspace sector, is experiencing rapid growth in demand and falling vacancy rates
Prague’s office market has proven its stability, with the total volume of modern office space exceeding 3.85 million m² at the end of Q2 2023. Although no new office buildings were completed this quarter, ongoing construction projects are poised to add approximately 66,800 m² of office space across seven projects by the end of the year, reflecting steady growth and plans for future expansion. At the same time, the market is seeing increasing demand for flexible workspace. In addition, four new flexible office centres were opened during the period.
The office market in Prague reached 3.85 million sqm at the end of the second quarter of this year. In the first 6 months of 2023, only 38,000 sqm of new office space was added to the market. Nearly 144,000 sqm of office space was under construction in Q2 2023, with a significant portion of these projects concentrated in Prague 1 and Prague 10.
The office vacancy rate recorded a slight decline in Q2, reaching 7.3%, which demonstrates the resilience and adaptability of the market. There is currently approximately 280,000 sqm of vacant office space available in Prague. Compared to other office markets in the CEE region, the Prague office market has the lowest vacancy rate.
In Q2 2023, there was an increase in lease transactions with a total volume of 148,800 sqm. This represented a significant 23% year-on-year increase, demonstrating the resilience of the market and its ability to adapt to changing dynamics. The Prague office market has also been significantly impacted by recent lease negotiations. The largest transaction of the quarter was the renegotiation of DHL Information Services’ 18,000 sqm lease in The Park building in Prague 4. At the same time, Microsoft renegotiated 16,100 sqm within the Delta building in Brumlovka, also located in Prague 4.
The increased leasing activity had a positive effect, with a quarter-on-quarter change in office occupancy of 13,600 m². This underlines the growing demand for office space and speaks to the dynamic nature of the market.
Prague’s flexible office market has seen a further upswing. At the end of June 2023, Prague boasted a total of 116,700 m² of flexible office space in 83 centres. At the same time, the share of flexible space in the total office volume increased to 3.0%, which is a clear indication of the growing interest in this concept of workspace.
“Our recent “Workplace Experience Survey” of 2,085 office users in the Czech Republic showed that the majority of companies now offer a 2-3 day home office, making the hybrid working model the new post-covid norm. As a consequence, employers are often forced to adapt their offices so that their spaces no longer serve only the traditional function of a workplace as a place to perform mostly daily individual tasks. The new, more flexible way of working combines shared workspaces with more places for collaboration, meetings or hybrid meetings”, adds Josefína Rybářová, Director of Tenant Representation at iO Partners Czechia.
Source: iO Partners Czechia
