The highest rent for office space in the centre of Prague currently exceeds €25. This offer mainly concerns completed and planned administrative projects such as DRN on Národní třída, The Flow Building on Wenceslas Square, the Hybernská 1 building or the Savarin complex. According to the findings of BNP Paribas Real Estate, the international consulting firm, the year-on-year increase in rents for the best office properties in Prague 1 is between 5% and 10%.
Coupled with the unrelenting demand of firms for rentals in the city centre and the limited supply, the cost of construction work and materials is also responsible for the increase in costs. For some professions, this is a jump in tens of percent over the past three years.
The increase in rent was to be expected, as the vacancy rate of high-quality office buildings has declined since 2014. The overpressure of demand has eased somewhat, with the completion of several projects, yet the increase in vacant space will not be dramatic. The vacancy rate in the whole of Prague at the end of the year will probably exceed 5%, whereas in the centre it will be around 4%.
A total of 335,170 sqm of new offices have been added to the market over the past two years throughout Prague. In Prague 1 it was 33,330 sqm. By the end of 2021, this should be expanded by another half a million square metres, with 76,580 sqm covering the centre of Prague. This will mainly be represented by the first stage of the Masaryk Station complex, in addition to the aforementioned The Flow Building (12,865 sqm).
In the last two years, there has been only one newly built office project (DRN) in Prague 1; in the rest of the cases it was the reconstruction of older buildings. Therefore, redevelopment represented 71%. By 2021, it will be the opposite. The new construction represents 89%, mainly due to the extensive scope of the Masaryk Railway Station project.
It continues to apply, and there is hardly any change in the trend that many companies consider an address in the centre of Prague to be a prestigious affair. However, this part of the city is also sought after due to the great accessibility for clients and business partners. This is apparent, for example, at the head office or premises of law firms, various consulting firms and financial institutions.
It's also similar for employees. Various surveys have shown that more than half of respondents, regardless of age, prefer to work in the city centre. This is mainly due to the good availability and wide range of services on offer. The interest doesn't weaken even with the long-term limited parking possibilities.
