In Prague, almost 205,000 sqm of new offices space was added in 2019. Although this was the second largest number since 2008, many tenants are still unable to find new premises or expand in an existing building. Over the past year, the realised demand reached 440,000 sqm, with new leases accounting for over 60% of this.
We recently published a study indicating that developers in Prague expect to complete nearly 1 million sqm of office projects by 2024. In the real estate (and media) market, our report received a great response. Many commentators also cast their doubts on such absorption in Prague.
However, it is perhaps enough to look at the results from the last quarter of 2019: there are currently no new offices in Prague. Demand is about a third higher than supply, and this year the volume of completed offices is set to reduce to 135 000 sqm.
The demand for offices in Prague still significantly exceeds what is on offer, even in the case of pre-leases. We are still struggling with a lack of high-quality premium space, which allows landlords to dictate conditions and choose tenants.
Lena Popova, Head of Office Agency
Of course, there are still some newly completed buildings which are not yet fully occupied. This may just be down to appearance, depending on whether there are lights on in the windows or not. However, this doesn’t mean that the premises are not already rented and that the new tenant is just preparing to move in.
We deal with many inquiries on a daily basis, and it is pretty lively around most of the newly completed office buildings. This certainly applies to those completed in the last 3 months of last year: the SmíchOff and GreenPoint projects in Prague 5, and Telehouse in Prague 6.The above trend is also evidenced by the increasing number of pre-leases for upcoming or newly launched projects: Fortuna (8400 sqm) in the Churchill II building in Prague 2 and Adastra in Mississippi House (7000 sqm) in Prague 8.
Mississippi House / Prague 8 - Karlin district
It can also be seen in the fading pressure on rent growth. In the last quarter, this was reflected in a shift in the highest realised rent in inner Prague, when it reached its high point of €17 / sqm / month. In terms of average rent, it jumped in both Prague 4 (€14.6) and Prague 5 (€13.9), whilst in Karlín and other areas of Prague 8 it was €14.7.
The relocation of top companies doesn't only fail due to the low availability of space in new administrative buildings. Very often, we find that the intention to move to larger premises is also limited by the lack of skilled labour.
You can download the whole report below in the Attachments section.
