The gross realized demand for office space in Prague increased by 43 percent last year. This is according to data from the Prague Research Forum (PRF), an association of real estate consultancies, for the fourth quarter of last year. The analysis shows that the area of new leases, renewals of existing contracts and subleases reached 551,500 square metres (sqm), with the highest rents rising by a tenth.
Most space was leased last year in Prague 4 (30 percent) and Prague 8 (23 percent). The greatest interest in leasing was from technology companies (28 percent), financial institutions and pharmaceutical companies (the same ten percent), the association said. The total size of office space in Prague at the end of 2022 was 3.8 million sqm.
In the fourth quarter of 2022, gross realised demand reached 153,200 sqm, according to the PRF, whose members include CBRE, Colliers, Cushman & Wakefield, JLL, Knight Frank and Savills. This represents a quarter-on-quarter increase of 12 per cent and a 45 per cent increase on the same period last year.
“Demand has grown in an unprecedented way. Given the current economic outlook, perhaps surprisingly so. A significant part of this is the unblocking of pent-up corporate demand from the covid years of 2020 and 2021, when no one was too sure what form and intensity office work would return. Now a large number of companies have tested various combinations of office and home working and have a clearer idea of how much space they will need in the future,” said Jaromír Sachunský of Prochazka & Partners.
He added that in terms of the size of demand relative to total office space, this is the third strongest year in Prague in the last ten years, after 2017 and 2018.
Last year, rents rose in the first three quarters, with the highest rising by EUR 2.5 (CZK 60) year-on-year. At the end of last year, rents in the centre of the metropolis reached EUR 26-26.50 (CZK 624-636) per sqm per month, according to PRF. In the inner parts of the city it ranged from 17.50 to 18 euros (420 to 432 CZK) and in the outer parts of the city it was 15 to 16 euros (360 to 384 CZK).
Last year, 75,400 square metres were completed in seven buildings. “Which is up 35 percent year-on-year, but down 42 percent relative to the 10-year average,” the PRF report notes. It expects to complete nearly 130,000 square feet of office space in 2023.
Office vacancy fell to 7.7 percent, down 0.1 percent year-over-year. Total office vacancy in the fourth quarter reached 293,600 square feet. The highest vacancy rate was in Prague 4 (60,900 sqm) and the lowest in Prague 10 (9,600 sqm); in percentage terms, the highest vacancy rate was in Prague 3 (23.8 per cent) and the lowest in Prague 8 (4.8 per cent).
Source: Prague Research Forum and CTK
