Prague Research Forum (PRF) publishes office market data for Q4 2024. PRF members include CBRE, Colliers, Cushman & Wakefield, iO Partners, Knight Frank and Savills, who share basic information about the Prague office market in order to provide the most complete, accurate and transparent data on its development.
The Prague Research Forum is supported by the RICS.
Jana Vlková, Head of Office Agency & Workplace Advisory, Czech Republic, Colliers, comments: “The Prague office market ended 2024 with a record volume of transactions, but with minimal planned new office construction in the coming years. As a result, the vacancy rate has started to decline to its current level of 7.3%. This figure is still considered healthy, however, large companies are already facing difficulties in choosing from a sufficient number of comparable options for their planned relocation. The limited supply of new speculative developments will reinforce the imbalance between supply and demand. Office rents have stabilised over the past year, but will face further upward pressure in the coming months due to limited relocation opportunities. The result will be an office market where the landlord is in a stronger position than the tenant.”
Office Building Supply
At the end of Q4 2024, the total office space in Prague increased to 3.96 million m². Only one office project was completed during Q4 2024, namely the reconstruction of the 100 Yards building in Prague 1 with a total of 3,300 m². The total volume of newly delivered offices during 2024 is expected to reach 72,800 m² across eight projects. For 2025, only 24,600 m² of new or reconstructed offices are expected to be completed.
For the second consecutive quarter, no new construction or renovations have been started. The total volume of office space under construction at the end of Q4 2024 was 164,300 m². However, most of this space has already been occupied. The largest volume of offices under construction is located in Prague 5 within the Smíchov City project.
The majority of the modern office stock (74%) consists of Class A buildings, with the highest quality spaces with an AAA rating accounting for approximately 21%.
Realized Demand
Total gross realized demand (including renegotiations of existing contracts and subleases) in Q4 2024 reached 185,100 m², representing an 11% year-on-year increase and a 39% quarter-on-quarter increase. New leases and expansions accounted for 38% of the total volume. Thanks to several large pre-leases, these accounted for 12% of the total demand. Renegotiations accounted for 48% of the gross demand, with the remaining 2% coming from subleases. The highest gross demand was recorded in Prague 4 (30%), followed by Prague 1 (16%) and Prague 8 (15%).
Demand was evenly distributed across several sectors. Technology companies led with 18% of gross demand, followed by financials (14%) and energy companies (14%).
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In 2024, gross take-up reached 636,700 m2. The 2022 volume was surpassed by 18% and the previous year's total volume was exceeded by 21%. New leases and expansions accounted for 33% of annual gross demand, pre-leases 16% and subleases 2%. The expected large share of renegotiations reached 49%.
The highest demand during 2024 was recorded in Prague 4 and 5 (both 25%), followed by Prague 8 (17%).
The largest share of demand in 2024 was from financial companies (25%), followed by technology companies (18%) and professional services providers (8%).
Vacancy rate and net absorption
Net absorption reflects the change in occupied office space in the market over a given period. In Q4 2024, positive absorption of 31,100 m² was recorded, which means that office occupancy in Prague increased significantly.
The office vacancy rate decreased by 66 basis points to 7.3% in Q4 2024 compared to the previous quarter. This represents an increase of 24 basis points year-on-year.
The total volume of vacant modern office space in Prague decreased to 290,700 m². The lowest vacancy rates were recorded in Prague 2 (2.6%) and Prague 8 (3.6%). Conversely, the highest were recorded in Prague 3 (19%) and Prague 10 (12%).
Rent
The highest achievable rent, which represents the base rent of the best available offices, has increased slightly, in the city centre, where it ranges between 28.50 and 29.50 euros per square meter per month. In the inner city, the highest achievable rent has remained between 18.50 and 19.50 euros. In outer city locations, the highest achievable rent is currently between 15.50 and 16.50 euros.
Although the highest achievable rent (prime) has increased slightly, base rents in established office locations continue to rise, driven by local competition, ongoing demand, increased construction costs and a limited supply of high-quality products.
Office space classification
The minimum requirements for inclusion in the total area of modern Class A or Class B offices include:
ü Completion or reconstruction after 1990.
ü Rentable area size of at least 1,000 m2.
ü Available units are advertised accordingly.
The following main categories are included in the property quality assessment with a brief description:
· Technical specifications - how well the property is built and equipped.
· Smart technologies - the efficiency of the building, what smart technologies are used and what extra amenities the building offers.
· Location - accessibility, services and amenities near the property.
· Service and security - how safe and well-maintained the building is.
· Parking - parking conditions with different requirements for buildings in the city center, inner city and outer city.
· Age of the building - completion of the building or last reconstruction.
· Subjective assessment - subjective assessment by Prague Research Forum members.
Each of the criteria has subcategories that allow for scoring, leading to the final score of the property. The maximum values for each category are as follows:
Category Share of overall rating
Technical specifications 41%
Smart technology 18%
Location 9%
Service and security 9%
Age of the building 8%
Parking 8%
Subjective rating 7%
