Prague is the second most active European market for flexible offices after London. Metropolises such as Warsaw, Amsterdam and Madrid follow at a distance, CBRE reports.
The attractiveness of flexible offices in the region is growing. Moreover, according to CBRE, this trend will continue this year. Historically, the demand for serviced offices has always been driven by companies from the technology sector. However, in the last sixteen months, which is also the average length of new contracts, there has been a significant return of large corporations providing professional services in HR and customer support for consumer products, as well as pharmaceutical companies and media and marketing companies.
The driving force behind the growing interest was, like elsewhere in the world, new work habits related to the COVID-19 pandemic, whether it is remote work, job sharing or a hybrid work model. However, several local factors make Central and Eastern Europe, including Prague, attractive for tenants and potential operators of coworking spaces. The main one is geopolitical and macroeconomic stability. Others include a qualified workforce, which is reasonably priced compared to Western Europe or the USA, and a high proportion of certified buildings on the office market.
"Demand for flexible offices in Prague reached record values in the 1st quarter of 2023 when it increased by 23% year-on-year. At the same time, the total volume of coworking spaces also increased last year. At the end of the year, it reached over 116,500 sqm, which represents approx. 3% of all modern offices in the metropolis," comments Lenka Ferguson, Specialist in flexible offices and coworking spaces at CBRE.
CBRE predicts the growth of demand from operators in the coming months as well, but it will be hindered by two main obstacles in the domestic market: limited construction of new office buildings in the metropolis and the policy of many owners of administrative properties. International coworking operators are used to a different approach and conditions from abroad. In London, for example, it is not at all possible to consider running an office building without an appropriate proportion of flexible offices run by a specialist operator.
The occupancy rate of flexible offices and coworking spaces in the country is around 75%. In desirable Prague locations, such as Karlín or the city centre, even from 85 to 100%, which are results above the European average.
Operators on Národní Třída and Na Příkopě Street achieve the highest rents, followed by Karlín. The monthly fee for a workplace in a separate office is €400 on average. Serviced office fees in locations further from the centre, which, however, still offer a high standard of equipment and services, start from €330 to €350.
"Prague has one of the highest shares of certified office buildings in Europe. They occupy 48% of the modern office market, while the European average is around 22%. The main reason is that the construction of commercial real estate, including offices, started here relatively recently. At the same time, competition is relatively strong on the domestic market, so property owners are willing to additionally certify existing buildings as well," explains Martin Vejražka, Head of the Sustainability Department at CBRE.
