Office markets across the six largest CEE capital cities, Prague, Warsaw, Budapest, Bucharest, Bratislava, and Sofia, have entered a new phase characterized by a severe supply crunch.
While demand for premium workspace remains stable, historically low construction activity is driving up rental prices for modern buildings and forcing a wave of modernization across older stock.
According to Colliers data, total office inventory across these six hubs reached 22.1 million sqm by the end of 2025. However, developers completed just over 200,000 sqm during the year, marking the lowest annual volume on record. The supply constraints are projected to persist into 2026, with only around 300,000 sqm of new space expected to be delivered.
High construction costs, stricter regulations and rising financing costs have led developers to curtail speculative construction. New projects increasingly require binding preliminary lease agreements before construction begins. "The office space market in CEE is going through a structural change. The combination of limited new supply, higher construction costs and changing tenant expectations is creating a more selective market," says Josef Stanko, Director of Market Research at Colliers.
Renegotiations now outnumber new leases. In Prague, they account for around 60% of leasing activity, as few alternatives exist and moving costs have risen. The average office vacancy rate in the region fell to around 10.5% by the end of 2025. Prague remains the tightest market, below 6%, while Budapest has the highest rate at 12.5%.
Premium rents rose in all six capitals, ranging from around €16 per sqm in Sofia to €30 per sqm in Prague, where asking rents for some new projects are approaching €40. Financial and business services now account for an increased share of leasing activity, targeting premium spaces.
Many properties completed in the late 1990s and early 2000s are now close to 30 years old and unable to meet current technical, environmental and workplace standards. More than 76% of office stock across Europe could be at risk of becoming obsolete by the end of the decade, though the CEE region is in a better position due to younger buildings (an estimated 43%). Renovation offers a solution: an example is Prague's Danube House in Karlín, where a new facade and energy improvements helped raise rents from €16 to €17 to more than €24 per sqm, attracting tenants Allegro and Everpure. Building B in Brumlovka, built in 1999 and modernised in 2020, achieved full occupancy upon completion. Experience in Prague, Warsaw and Sofia shows comprehensive renovation can increase rent by 20% to nearly 50%.
For buildings in secondary locations the calculation is more complex, and not all buildings will be suitable for renovation. Some owners are considering alternative uses including residential units, hotels and data centres. Colliers expects office supply to remain limited, driving further rent growth. "The gap between buildings that meet tenants' modern expectations and those that do not will continue to widen. The most successful landlords and investors will be those who actively adapt their assets," adds Jana Vlková, Director of Workplace Advisory and Office Agency and Partner at Colliers.
