Nearly two-thirds of tenants from modern office buildings consider to sublet some of their space to other companies. This is a direct result of the Covid-19 pandemic. Many companies continue to operate in a restricted mode, with some employees or even the entire workforce working from home. Based on the experience gained from March to June, other tenants have found that, thanks to functional information and communication technologies, they do not need desktops to the same extent as before the pandemic. This information follows a current survey conducted among two hundred clients by the international consulting company, BNP Paribas Real Estate.
As a result of this trend, and in order to save as much as possible rental costs, hundreds of square metres of new space are offered for sublease on the Prague office market every day. These are usually A-class office buildings, many of which have been completed in the last three years, in exclusive locations. In total, over 70,000 m2 of office space for sublease appeared on the market in the last quarter!
"Subleases currently dominate the office market. In the main, these are modern, fully equipped premises, available to move in immediately, which offer flexible lease conditions, including the possibility of short-term contract," explains Lena Popova, head of the Office Agency team at BNP Paribas Real Estate CR and Slovakia. "Thanks to these subleases, current tenants can secure additional cash flow and reduce rental expenses, while subtenants can rent high-end office space that would normally be unavailable to them on the market." The only thing preventing many more companies from migrating to such premises, is that rent prices are still relatively high and companies are uncertain about their own future.
The survey also showed that most tenants who decided to sublet part of their space have copied their own rental price. In Prague, this ranges from between €15 and €18/m2 for new offices, around €12 to €14/m2 for B-class offices and for C-class administrative premises it is around €10/m2. Almost double high rent very often discourages a significant proportion of office tenants in older buildings from moving.
However, this situation can change quickly. The supply of space significantly exceeds the demand. "Due to leases of a longer duration, companies realize that it's better to cover at least part of the rent and the total cost of services from the sublease, than to bear the full burden of costs themselves," adds Lena Popova, who handles several dozen similar cases with her team.
According to another BNP Paribas Real Estate survey from June, most respondents consider to sublet 15 to 20% of their space. However, the current numbers indicate that this percentage could double. "Once again, we are entering a part of the market development cycle, where all the trumps cards are in the hands of the tenants," concludes Lena Popova.
