The volume of newly completed offices was 22,700 m2 in the second quarter, namely in the two completed projects Dock In Five and Košířská Brána. The current size of the market in Prague thus reaches a full 3.75 million m2. As in the first quarter, the gross realized demand was also considerable. The volume of net realized demand corresponds to 80,000 m2, which is approximately 65% of gross realized demand and represents the highest volume since the 4th quarter of 2019. The share of renegotiations was only slightly above 30%. The resulting total rental activity of 123,600 m2 testifies to the busyness of the office market, which has hardly been damaged by any of the current negative externalities. "Tenants understand that evolution and change in the work environment is necessary, and we are seeing moves from aging buildings to new ones more and more often. At the same time, we believe that they will be able to appreciate the added value of newly built or reconstructed projects despite the rising costs," says Josef Stanko, an analyst at Colliers. The largest transactions of the 2nd quarter include the pre-lease in the Roztyly Plaza building, then the renegotiation in the BesNet Center or the new lease in the Filadelfie building in Brumlovka.
The vacancy remains the same
Due to limited new construction, vacancy remained virtually unchanged at 8.4%, with approximately 313,400 m2 immediately available across the entire Prague market. The most space is available in the largest sub-market in Prague 4, followed by Prague 5. "The most sought-after sub-markets have a vacancy rate of 7%, sometimes even less. This indicates that tenants looking for new premises are increasingly asking for locations with modern and sustainable buildings," says Josef Stanko, adding that the vacancy rate in the rest of the market may in the future be affected by the exit of old offices, but this is a great chance for redevelopment or overall change utilization of the old released office fund. The offer of subleases is then very variable. "According to our latest research, there should be more than 60,000 m2 of space on the market offered in the form of sublease, which represents roughly 1.6% of other vacant spaces," adds Josef Stanko.
Rents and service charges continue to rise
Unprecedented increases and rent adjustments on a monthly basis appear especially in new construction. Prime rents in the city center have risen up to €25.50 per m2, with further increases expected due to new build prices. The highest rents in the inner and outer city are slowly starting to merge - the best quality office space within the inner city ring can be rented for €16.50 to €18.50 per m2 per month and in the outer city locations the price is around €14.00 up to EUR 16.00 per m2 per month. On the contrary, the difference between older and new objects is increasing. As inflation rises, so does the question of service charges. According to the data, these increased by up to 25% this year and will probably increase even more with the arrival of the heating season.
Outlook for the next months
Disrupted construction material supply chains are gradually calming down, as suppliers and developers themselves have been able to find new sources. However, rents and service charges are likely to continue to rise. Currently, many new projects are being introduced under the banner of the city, which focus on the reconstruction of main streets, the creation of boulevards and the strengthening of infrastructure and public transport. Plans have also been presented for areas around metro line D stations, and the creation of new office locations is once again a little closer to reality. Together with the Bubny-Zátory brownfield in Prague 7, Prague 4 could thus be the most developed office sub-market. As for the launched projects, generous projects such as Hagibor 01 and 02 or Rohan City A1 have entered the active construction phase. In the rest of the year, the construction of another 74,000 m2 of brand new office space can be expected to begin throughout Prague.
