More and more companies are considering expanding into Czech regions, but a lack of suitable office space is preventing them from doing so. In regions outside of Prague or Brno, there is not only a shortage of modern space for rent, but also a lack of flex operators. Those types of businesses could benefit from the growing interest of international companies in the Hub & Spoke or Flex & Core model, reports Colliers.
"The number of companies looking for quieter locations or interested in expanding into Czech regions outside of Prague and Brno is steadily growing. They are attracted by both the lower cost of leasing office space and easier access to human resources. Unfortunately, in the regions, companies often encounter problems with the availability of suitable office space, and it looks like the situation will not improve in the near future," explains Jana Vlková, Director of Workplace Advisory and Office Agency at Colliers, adding that demand is growing especially in Ostrava, Olomouc, Ústí nad Labem, Hradec Králové and Plzeň. However, in these cities, modern office stock is usually only between 30,000 and 100,000 sqm. And although there is a relatively good supply of future projects, in many cases their delivery has been delayed or postponed for economic reasons.
Office space prices are many times lower than in Prague
Compared to Prague, where the most expensive and exclusive office projects in the city centre rent for €27 per sqm, rental prices in regional cities are three times lower. For example, premium space in Ostrava or Plzeň costs €13.50 to 14.00 per sqm per month, in Olomouc €9.20 to 13.90, in Ústí nad Labem €6.30 to 10.50, and in Hradec Kralove €7.00 to 8.80. The lowest rents are in the Zlín, Vysočina and Liberec regions, where companies usually pay €5.00 to €8.80 per sqm per month.
People are the main attraction and wages are up to 30% lower
Companies in the business and IT services sector, for example, are looking to the regions as the next location for their Prague or Brno headquarters. According to the ABSL association, this sector, which already employs nearly 160,000 skilled workers, is looking at Ostrava, Olomouc, Hradec Králové and Plzeň. "This is mainly due to the post-pandemic transformation of the working environment and the interest of these international companies in concepts such as Hub & Spoke, in which companies reduce the size of the main office and supplement it with smaller spaces in different locations. There is also Flex & Core, which combines a smaller main office with membership in one or more co-working centres," explains Jana Vlková. However, people play a major role in this transformation. In Prague, where the current unemployment rate is just 3.1%, employers have long struggled with the very low availability of job seekers.
Unemployment rates are usually higher in regional cities, and this increases the chances of finding labour needed: even at lower wages. While the average monthly wage in Prague was CZK 52,833 (€2,167) in the second quarter, according to the CZSO (Czech Statistics Office), it was only CZK 41,912 (€1720) in the South Moravian Region, CZK 41,249 (€1692) in the Hradec Králové Region, CZK 39,108 (€1605) in the Moravian-Silesian Region, CZK 39,589 (€1625) in the Ústí Region and CZK 38,488 (€1580) in the Olomouc Region.
