The vacancy rate on Prague’s office market decreased to 4.3%, down 80 basis points in comparison with the revised results of Q4 2018. The Prague Research Forum announced the office market figures for the first quarter of 2019.
Office stock and new supply
A volume of 28,100 sqm of modern office space was delivered to the Prague market in the first quarter of 2019, bringing the total modern office stock to 3.51 million square meters. New completions include two properties in two developments. Rustonka R3 in Prague 8 with 12,900 sqm of office space and Churchill I in Prague 2 with 15,200 sqm.
Development of only one new office building commenced during Q1 2019, a refurbishment of BB Centrum B in Prague 4 (14,200 sqm). There is currently about 337,200 sqm of modern office space under construction, of which 172,500 sqm is expected to be completed by the end of 2019. The remaining space has planned completion in 2020 and 2021.
A-class office stock has about 72% share in the total office supply, whereas the top-quality AAA-class properties accounted for almost 22%.
Office take-up
Gross take-up (including renegotiations and subleases) in the first quarter of 2019 amounted to 95,200 sqm, representing a 41% decrease on the previous quarter and 16% increase on the first quarter of 2018.
The highest demand in Q1 was recorded in the city districts of Prague 8 (33.3%), Prague 4 (27.2%) and Prague 1 (17.2%). The most active companies were from the IT sector (23.0%), followed by professional services sector (17.0%) and flexible workplace (12.1%).
The share of renegotiated leases in the first quarter of 2019 reached 25.9%. Net demand (new leases, expansions and pre-leases) accounted for about 74.1% of the total take-up.
Major office leasing transactions
The major transactions of the first quarter of 2019 were the new occupation of Veeam Software (8,600 sqm) in Rustonka R3, followed by new lease of Spaces in Nile House (3,600 sqm).
Office vacancy
The share of vacant office space decreased to 4.3%, down 80 basis points in comparison with the revised results of Q4 2018. The vacant space totalled 152,600 sqm. The largest availability was in Prague 5 with 39,300 sqm, representing the vacancy rate of 6.5% in the district, followed by Prague 4 with 36,000 sqm and the vacancy rate of 3.8%. The lowest amount of vacant space was in Prague 3 with 2,600 sqm (vacancy rate of 2.1%) and in Prague 10 with 4,300 sqm (3.1%).
With decreasing vacancy rate, the pressure on rental increase continued. Prime headline rents in the city centre stood between €21.50 and €22.50/sqm/month in the city centre at the end of Q1 2019. The Inner city prime rents ranged from €15.00 to €16.50/sqm/month and the outer city from €13.50 to €15.00/sqm/month.
The members of the Prague Research Forum – CBRE, Colliers International, Cushman & Wakefield, JLL, Knight Frank – share non-sensitive information with the aim of providing clients with consistent, accurate and transparent data about the Prague office market. The RICS supports activities of the Prague Research Forum.
