Gross take-up in the third quarter of 2019 amounted to 85,200 sqm on the Prague office market, representing a 17% decrease on the previous quarter. The Prague Research Forum announced the office market figures for Q3 2019.
Office stock and new supply
32,900 sqm of modern office space was delivered to the Prague market in the third quarter of 2019, bringing the year to date completions to 112,900 sqm and the total modern office stock to 3.6 million sqm. Completions include 3 properties: two were new buildings - Dock In Three in Prague 8 with 16,000 sqm and Argentinská Office Building in Prague 7 with 5,800 sqm. The last completed property was the refurbishment of Life Building C in Prague 4 with 11,100 sqm.
The development of three new office buildings commenced during Q3 2019, the construction of the next phase of River City in Prague 8, consisting of two new buildings, Mississippi House (13,300 sqm) and Missouri Park (7,400 sqm) and the refurbishment of Sixty House in Prague 4 (5,500 sqm, previously known as Na Pankráci 60). The current pipeline under construction amounts to 315,600 sqm, with 89,100 sqm due in Q4 2019 and 204,900 sqm in 2020.
Class A office stock has a ca. 73% share in the total office supply, whereas the top-quality Class AAA properties accounted for almost 22%.
Gross take-up (including renegotiations and subleases) in the third quarter of 2019 amounted to 85,200 sqm, representing a 17% decrease on the previous quarter and a 34% decrease year on year.
The highest demand in Q3 was recorded in the city districts of Prague 3 (20.7%), Prague 8 (18.9%) and Prague 4 (16.6%). The most active companies were from the professional services sector (23.3%), followed by the IT sector (10.2%) and the consumer goods sector (10.1%).
The share of renegotiated leases in the third quarter of 2019 reached 36.0%. Net demand (new leases, expansions and pre-leases) accounted for 62.8% of the total take-up.
Major office leasing transactions
The major transactions of the third quarter of 2019 were the renegotiation and expansion of ExxonMobil (15,400 sqm) in Luxembourg Plaza in Prague 3, followed by expansion and renegotiation of Wargaming in Oasis Florenc (2,700 sqm) in Prague 8, the renegotiation of Camping Gaz in Balabenka (2,500 sqm) in Prague 9 and the pre-lease of Henkel in Dock In Four (2,200 sqm) in Prague 8.
The share of vacant office space in Q3 2019 reached 5.1%, an increase of 50 basis points in comparison with the mid-year results. The vacant space totalled 182,700 sqm. The largest availability was in Prague 4 with 52,100 sqm, representing a vacancy rate of 5.5% in the district and followed by Prague 5 with 45,300 sqm and a vacancy rate of 7.2%. The lowest amount of vacant space was recorded in Prague 10 with 1,600 sqm (vacancy rate of 1.1%) and in Prague 3 with 3,100 sqm (2.4%).
With the low vacancy rate, the upward pressure on rents continued. Prime headline rents in the city centre stood between €22.50 and €23.00/sqm/month in the city centre at the end of Q3 2019. Inner city prime rents ranged from €15.50 to €17.00/sqm/month and from €13.50 to €15.00/sqm/month in the outer city.
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.
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