News Article Cushman&Wakefield office Prague report
by Property Forum | Office

The number of office schemes built in Prague this year is the highest in the last five years: a total of 17 new buildings providing office space will have opened by the end of the year. The last time the market reached such a high figure was in 2014 – at the time, it was 18 schemes. In the meantime, the number was one-third lower, about 11 buildings on average.

Out of the total 17 schemes to be commissioned this year (both completed and slated for completion by the end of the year), six are refurbishment projects and 11 are completely new builds. Again, this is the highest figure in recent years, and again, the last year when there were more new buildings completed was 2014, with 12 schemes.

Market boom aids development

The favourable economic situation and steadily declining vacancy rates are the factors that developers have been trying to use as much as they can. Their speculations for quick earnings fell through in 2009 because the economic crisis affected the period from the commencement to the completion of projects, with a major negative impact on demand. At the same time, it has to be said that developers in Prague cannot really plan the launch of their projects due to the complex, unclear and, most importantly, protracted permission process.

Older buildings are refurbished because it is necessary to respond to the competition and to the changing requirements for office space among employees.

Radka Novak, Head of Cushman & Wakefield’s Office Agency Team, says: “In general, it is very nice to see the newly coming worker generations push the quality of office stock and, more importantly, space inside upwards, with the well-being trend becoming a rule rather than an exception.”

Karlín and Smíchov remain firm favourites

The highest number of office schemes – three each – are currently being completed in Prague 5 (ČSOB HQ. II in Radlice SmichOFF and Green Point near Anděl) Prague 7 (Centrum Stromovka in Letná Argentinská Office Building and Riveroff Office House in Holešovice) and Prague 8 (DOCK IN THREE in Libeň Rustonka R3 and Praga Studios in Karlín). With the exception of one project, these are all newly built developments for which the city districts still have room.

Radka Novak Head of Cushman & Wakefield’s Office Agency Team says: “The continued trend of preferring the Karlín and Smíchov quarters is obvious. Karlín, in particular, has been in the sights of most companies: in addition to a full range of civic amenities, they are attracted by the very pleasant residential environment with many attractive cafés and restaurants as well as by the easy access from the city centre via cycling trails and on foot. The demand for Prague 8 is demonstrated e.g. by the recent arrival of Unilever and Karlovarské minerální vody in Palmovka.”

By contrast, no building is being developed or refurbished in Prague 3 this year; the district has been one of the least sought-after office locations for a long time. Other than that there are one or two schemes in each of Prague’s districts. For instance the ARA Palace originally a department store dating back to the 1930s and the building at Na Poříčí 5 close to the Palladium shopping centre have been completed in the historic centre of Prague 1.

Sustainability as the principal trend

Both new development and refurbishment place great emphasis on environmental aspects of sustainable operation and energy efficiency. Compliance with all environmental standards is a matter of course; many buildings boast certificates such as LEED and BREEAM. New buildings often include features such as cooling beams energy recuperation lifts smart LED lighting ingenious façades and heating ventilation and air conditioning systems and other elements that reduce electricity and water consumption.

Certain schemes cater to the current trends in other aspects as well – for example, Praga Studios offers its users a mobile application through which they can use various services on the premises: order a meal from the local restaurant rent an electric vehicle or bicycle reserve a parking space and so forth.

Radka Novak Head of Cushman & Wakefield’s Office Agency Team says: “With the Eco Dashboard app and other elements Praga Studios is raising the innovation bar in terms of sustainable development and well-being.”

207,000 sqm of new space two-thirds of which already occupied

Overall 2019 will bring almost 207,000 sqm of new space. The greatest area (30,000 sqm) is attributable to the ČSOB HQ. II project which will be fully occupied by the bank. The Harfa Office Center will have a similar floor area – and it is also 100% occupied now; the ARA Palace boasts being fully occupied as well.

The demand for new office space is huge: 61% of the aggregate floor area in all 17 schemes of 2019 including those in progress has already been taken up. Considering only projects under construction the take-up (pre-lease) figure is not small by any means: it is 50 per cent in aggregate.

Rustonka is one example of a project that was occupied quite quickly and successfully: its third building was only completed in the last quarter but as of now only 250 sqm remains vacant – less than two per cent of the total floor area.

More new projects in the pipeline

Radka Novak Head of Cushman & Wakefield’s Office Agency Team says: “It seems that this year will be a peak in terms of the number of projects completed through next year should be very active too. It might break another record if all the projects slated for completion in 2020 are actually completed.”

As of now there are a total of 12 projects including nine new ones in progress and slated for completion next year. There are six more buildings (three new ones and three refurbished ones) that should be completed by the end of 2020 although the actual construction has not started yet. If everything goes as planned there will be a total of 18 schemes including 12 new ones.