Demand for new offices in Prague increased by a fifth in comparison with the rest of 2021, reports BNP Paribas Real Estate, the consulting company. New leases accounted for 58% of the total result in the period from July to September. In the remaining cases, existing contracts were renegotiated. Thanks to these positive signals, the implementation or preparation of several large-scale projects continues. An additional 0.5 million sq m of new office space should be available in Prague by 2025.
The recovery is also evident in the flexible office market. Based on the growing demand of end users and tenants, 4 new co-working centres and 3 centres operating serviced offices have opened or will open in Prague by the end of the year. "The situation may change short term, due to another wave of Covid-19. However, in the medium term, expressed in terms of the length of leases, we see a trend of stabilisation," comments Lena Popova, Head of Office Agency at BNP Paribas Real Estate.
The renegotiation of NN in the Zlatý Anděl building (6,500 sq m) in Prague 5, mediated by the BNP Paribas Real Estate team, had the greatest impact on the lease balance. 3,500 sq m in the Hadovka building in Prague 6 was also renegotiated by the tenant, Aeskulab. On top of this, Zásilkovna newly leased 3,300 sq m in the Balabenka Office Building in Prague 9.
The past quarter is also evidenced by the slowdown in construction that occurred during 2020. Only one office building was completed: the New Town Hall in Prague 12, which created approximately 1,000 sq m for commercial lease. The Harfa Business Centre B project (24,350 sq m) in Prague 9, by developer Kaprain, and the multifunctional Viktoria Centre project in Prague 3 Žižkov, which includes not only office space, but also residential and retail space, are to be completed by the end of the year. The office area here occupies 1750 sq m.
Of the aforementioned city-wide projects, work continues on Masaryčka and Nová Waltrovka with Penta Real Estate and Port 7, managed by Skanska. "The expected increase of 500,000 sq m in new office space by 2025 includes the extensive implementation of Sekyra Group in Smíchov and Karlín Rohan, as well as the administrative part of the Hagibor project from the Crestyl development group," adds Kamila Breen, Head of Research & Consultancy at BNP Paribas Real Estate.
In Q3, two of the main indicators in the development of the office space market remained without any major fluctuations. Vacancy has risen slightly to the current 8%, which is still seen as a low vacancy rate. Rents also remained stable, where it ranges between €22.50 - €23.00 / sq m / month in the centre of Prague, €15.50 - €17.00 / sq m / month in the inner city, and €13.50 - €15.00 / sq m / month on the outskirts of the city.
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