Office tenants can look forward to a new supply of administrative space that is going to be delivered to the Prague market in 2017 and 2018. Last´s year paradox, when the economy was booming and the market registered a robust demand for new office space, but the amount of new completions dropped to a historical low, is forecast to be cleared out in the months to come. Currently, there are 330 000 sqm of new offices under construction in Prague out of which approximately half (171 000 sqm) is expected to be delivered this year. JLL looked at the largest office submarkets of the Czech capital in detail.
“The current situation on the Prague office market reminds in many aspects of the peak of the office market in the last decade (in 2007). The economic situation allows the companies to expand, although due to their increased cautiousness, the decision making process generally takes more time. A number of tenants are looking for new premises, which shows also in the office market statistics as the new lease proportion is significantly higher compared to the renegotiations that significantly declined in 2016. The tenants are usually changing their seat after 10 – 12 years which provides them with an excellent opportunity to create more effective and more attractive office space in line with the modern trends that meet the companies´ staff needs,” says Petr Kareš, Head of Tenant Representation of JLL Czech Republic.
„Compared to the last decade, the rents of modern office space have been growing moderately and the incentives are decreasing. The Prague office market is restoring the balance, i.e. coming back to rents without crisis discounts. One of the reasons, apart from the booming economy, is also a change in the tenants´ behaviour as they came back to value the quality of the space and the location as the key aspects in the decision making process regarding new company seats. The process of office development is also indirectly affected by the war for talents and the companies are required to create an attractive and friendly working environment which is subsequently perceived as one of the benefits offered by the employer. The architecture and the function has increased their value in the eyes of the tenants. All these aspects enable the developers to create more sophisticated and visually attractive buildings where cost savings are not the key, as it was typical of the crisis era,” concludes Eduard Forejt, Business Development Director of JLL Czech Republic.
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