Finding a vacant space in the highest-quality office buildings in central Prague has proven to be a mission impossible. According to Savills’ analysis, vacancy in AAA properties has consistently remained at zero.
The situation is not much better in other city districts either. The volume of vacant prime space has dropped year-on-year from 81,000 sq m to 49,000 sq m, the lowest level since 2020. In total – including lower-quality offices – only 259,000 sq m was immediately available across the capital in June, representing another 10% decline compared to the previous year.
“We are currently seeing steady demand for prime offices in the city centre and inner city. However, this demand increasingly has to focus on space that will only become available or enter the market in the coming years. New development is minimal, which continues to drive rents upward. We have been pointing to this scenario for some time, and now the long-term undersupply of new projects is fully manifesting,” says Pavel Novák, Head of Office Agency at Savills.
An expansion of office supply in the city centre is not expected until planned projects are delivered, likely from 2028 onwards. Of the projects scheduled for delivery in the coming years, only about 25,000 sqm remains available. “Upcoming projects include HYBE at Masarykovo nádraží, Vydrovka at Florenc, or the reconstruction of Kotva. Although these projects are at different stages of preparation, we are already seeing interest from companies in the future space. Early engagement often means more favourable lease terms and the opportunity to secure the best locations within the building,” adds Pavel Novák.
Given the lack of new development, the investment appeal of prime offices in central Prague continues to grow. David Štrouf, Investment Associate Director at Savills, notes: “There are currently several office buildings available on the market in the city centre – both newly built, technologically advanced properties and older assets with value-add potential through refurbishment or modernisation. With multiple transactions happening at the same time, investor attention is spread out, and sale processes are somewhat less competitive than in the past. This is reflected in yield stability. Prime yields for high-quality offices remain in the 5.2–5.3% range. Nevertheless, the shortage of new construction contributes to growing tenant demand, which in turn increases the value potential of these assets.”
The lack of new development is pushing rents higher while also allowing landlords to reinvest in their buildings and respond to tenants’ increasing requirements. Prime headline rents in central Prague have already exceeded €30/sq m/month and are expected to rise further in upcoming projects.
“The market is shifting from purely quantitative growth to qualitative transformation. With little new construction, tenants attach greater importance to the buildings they remain in. Owners who invest in modernisation will reap the benefits in the coming years,” concludes Pavel Novák of Savills.
