More and more companies are considering regional expansion, but the lack of suitable office space prevents them from doing so. In regions outside of Prague and Brno, there is not only a shortage of modern spaces for rent, there is also a lack of flex operators. At the same time, they could benefit from the growing interest of international companies in the so-called Hub & Spoke or Flex & Core model. This is according to Colliers, a leading provider of diversified professional services in commercial real estate and investment.
Imagine the announcement of a new development project in Prague. A luxury house on some lucrative land. However, the company sponsoring the entire project is not one of the established players like Penta or Sekyra Group, but for example Lasvit.
UBM Development AG will implement the construction of the Timber Marina Tower project, a 113-meter high office building with a wood-hybrid structure in Vienna's Handelskai district. At the same time, the company progressed with the Timber View residential project and the Timber Peak office building in Mainz, and with the preparation of the LeopoldQuartier district in Vienna. UBM plans to become the largest European developer of ecological buildings with a wooden structure. In the Czech Republic, the parent company's vision is followed by UBM Development Czechia, which is building the Timber Praha residential project, the first wooden multi-storey apartment buildings in the capital. Compared to ambitious high-rise building projects abroad, however, Timber Praha's energy-sustainable houses have a maximum height of 12 meters, due to restrictions arising from domestic legislation.y
Back in the 1980s, the Karolina coking plant operated in the Ostrava area. The part of the city that originally served mines and heavy industry was then an empty brownfield for several years. However, it is gradually turning into the commercial and administrative center of the city and is attracting more and more investors.
High demand and a lack of new projects caused a decrease in the vacancy rate of Prague offices, which currently stands at 7.26%. The volume of new construction and renovations was approximately 143,600 square meters at the end of Q2 2023, and the total market size was 3.85 million square meters. Reference rent prices have not changed in any way compared to the previous quarter, however, in connection with ESG and modern standards, the price of office equipment is increasing. It can easily exceed 1,000 euros per square meter. That's according to a survey by Colliers, a leading provider of diversified professional services in commercial real estate and investment management.
The operation of contemporary offices shows that the intersection between work and personal life is increasing. The personal life of employees has an ever-increasing influence on companies' decisions about choosing a suitable office. On the other hand, employees are considering working corners at home for a comfortable home office or close commuting distance to work.
Working in coworking offices, i.e. in shared spaces, is gaining more and more popularity. Not only is the interest of companies in the volume of rentals of such capacities growing, but also the total share of coworking spaces on the Prague office market.
The construction of no office building has been started in the Czech capital for a whole year, and none was completed during the past quarter. Of course, these are not the only current parameters of the Prague office market, but according to the regular report of the Prague Research Forum, they say a lot about its state.
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