Demand for new offices in the Czech Republic rose by 13 percent in the first half of this year compared to the five-year average and is currently the third highest in Europe. This is according to an analysis by consultancy Savills. According to Savills, demand is facing insufficient construction, with a significant part of the projects under construction being occupied. According to the Savills, a company with 100 employees, which needs offices of approximately 1,500 sqm, should start looking for space two and a half years in advance.
No developer has started construction of an office building in Prague in more than 12 months. According to Savills, 195,700 sqm of new office space could be added in the capital by the end of 2025, while 143,600 sqm is currently under construction. The Prague Research Forum’s analysis shows that office vacancy fell to 7.3 percent quarter-on-quarter in the second quarter, while demand rose 23 percent year-on-year. The highest monthly rent stabilized at EUR 26.50 to EUR 27 (approximately CZK 650) per square meter for prime offices in the city center, at around EUR 18 (approximately CZK 433) in the wider city center and EUR 15 to 16 (approximately CZK 370) in the outskirts.
“If we look in more detail at the individual districts, the centre and adjacent areas in particular are really suffering from a lack of quality space, and many companies have no choice,” said Pavel Novák, head of office at Savills.
He expects the situation to improve and the construction market to stabilise. Last year’s rent growth hit a price peak, he said. The limiting factors of construction, such as the prices of construction work, at which it was not worth building under the current conditions, should also subside.
According to Savills’ analysis, the lack of office space in the centre of Prague is leading to further relocation of companies to the outskirts of the capital. According to Barbara Jansová, ESG consultant and project manager at Savills, there will be an increased supply in the future in Prague 4, Prague 5 in the area of Smíchov to Radlice or in Prague 8 to 10. The majority of such developments are located near the metro. In contrast, Prague 2, Prague 3 and Prague 6, with the exception of primarily residential locations, remain on the periphery of interest for developers of office buildings.
“One reason for this is that at the time of online meetings, companies may no longer have offices primarily available for visitors. Instead, they prefer to choose more pleasant locations with plenty of greenery and services such as restaurants, cafes, surgeries or sports facilities, while maintaining a low-emission mode of transport dominated by cycling and public transport,” said Jansová.
Compared to other European countries, the demand for offices in the Czech Republic is the third highest in this year’s first half of the five-year average. According to the analysis, it is higher only in Luxembourg, where it increased by 137 percent, and in Oslo, Norway, where demand for offices increased by 22 percent. For example, demand fell by 62 per cent in Lisbon, 42 per cent in Dublin and 21 per cent in Budapest.
Source: Savills and CTK
