Office construction in Czech regions is slowing down as developers increasingly focus on residential projects due to poor profitability without pre-leases or prime locations, according to a report by Colliers.

Prague's office market is experiencing a supply shortage that will continue through 2026, with vacancy rates dropping to just 5.9% - the lowest since early 2020, according to a report by Colliers. Despite strong demand, limited new construction is creating tension in the market.

The Czech investment market recorded its strongest year ever in 2025, with total investment volume reaching €4.3 billion, significantly exceeding previous highs from 2016 and 2017, according to Colliers.

Annual demand for industrial real estate in the Czech Republic reached its third-highest level ever last year, while the volume of buildings under construction remained at record levels. Interest in investing in local industrial real estate reached over €800 million, more than the last three years combined, according to a report by Colliers.

Central Europe's commercial real estate sector is experiencing a transformation, with Hungary leading the recovery through an 86% year-on-year increase in investment driven by Asian capital from China and South Korea. The CATL factory in Debrecen and BYD in Szeged, along with the planned Volvo plant in Košice, Slovakia, are reshaping the region's industrial landscape and creating demand for logistics space.

Only 26,300 sqm of new office space will be completed in Prague this year, the lowest figure in the past decade. Although construction activity has slowed significantly, the total volume of projects under construction remains strong at 244,200 sqm across 17 buildings at the end of the third quarter, according to data by Colliers Czech Republic.

The gap between offer and final prices is narrowing in the Czech Republic and is helping transaction activity for the rest of 2024, according to the regular quarterly office market survey published by Colliers.