Key findings

• Almost 200,000 sqm of office space was under construction by the end of Q4 2021, most of it in Prague 5 and Prague 8
• In 2022, 76,300 sqm of office space is due for completion, significantly below the average of recent years
• Office space available for sublease increased by 27% in Q4 2021
• Gross take-up increased by 6% year on year
• Net absorption was positive at 6,100 sqm in Q4 2021, indicating continued interest in office space
• Vacancy rate decreased for the first time in almost three years to a level of 7.8%
• Prime rent grew to €23.50–24.00 per sqm per month; further growth is expected

Office stock and new supply

Prague’s office stock remained at 3.73 million sqm at the end of 2021. The Viktoria Office Center building (1,700 sqm) of CTR Group was the only building completed in Q4 2021. During the entire year of 2021, 56,000 sqm of office space in eight buildings was delivered to the market, which is 62% less than in the previous year. The completion of only nine office projects with a total area of 76,300 sqm is expected in 2022, followed by another 140,000 sqm planned for 2023, assuming the developers meet their scheduled deadlines.

In Q4 2021, the construction of two office buildings commenced: Roztyly Plaza by Passerinvest (20,000 sqm in Prague 4) and Block Karlín by Ungelt (8,200 sqm in Prague 8). Throughout 2021, construction of 127,800 sqm started in eight office projects (12 buildings), almost three times more than in 2020. At the end of December 2021, 195,200 sqm of office space was under construction, 43% more than at the end of the previous year.

Class A buildings account for most of the modern office supply (73%), with the highest quality Class AAA space accounting for over 17% of the total office stock.

The total volume of space immediately available to sublease reached 78,700 sqm in Q4 2021, 27% more than in the previous quarter.

Office take-up

Gros take-up (including renegotiations and subleases) totalled 106,000 sqm in Q4 2021, representing a 6% year-on-year as well as quarter-on-quarter increase.

The highest gross take-up was recorded in Prague 4 (24%), Prague 8 (20%) and Prague 5 (18%). Companies operating in IT (22%), professional and consulting services (14%) and finance (10%) accounted for the highest demand.

New leases of existing space and expansions accounted for 48% of the total gross take-up, while pre-leases of new offices under construction accounted for only 7%. Renegotiations of existing contracts represented another 44%. The remaining 1% is comprised of subleases of already leased space.

Gross take-up for the whole year of 2021 increased by 16% compared to the previous year to the level of 387,100 sqm. Most spaces were leased in Prague 4 (22%) and Prague 8 (18%). The highest interest among tenants came from IT companies (16%) and professional services (12%).

Major office leasing transactions

The largest transaction in Q4 2021 was the renegotiation of the lease to Thales DIS Czech Republic in BB Centrum (4,400 sqm). Other two significant transactions were the pre-leases of space in PORT 7 by the insurance company Direct pojistovna (4,200 sqm) and the co-working operator Scott.Weber (3,800 sqm).

Office vacancy and net absorption

Net absorption represents the change in the occupied stock within a market during the survey period. Compared to the previous quarter, the occupied office stock increased by 6,100 sqm. However, year-on-year absorption was negative: the occupied office stock declined by 12,800 sqm.

The vacancy rate decreased slightly from 7.9% in Q3 to 7.8% in Q4 2021. The vacant space totalled 292,700 sqm at the end of the quarter. The highest amount of vacant space was in Prague 4 (71,400 sqm) and Prague 5 (51,200 sqm). The lowest amount of vacant space was recorded in Prague 2 (9,800 sqm) and Prague 10 (8,600 sqm). However, the highest vacancy rate was in Prague 3 (14.9%) and Prague 9 (14.6%), the lowest in Prague 7 (4.8%) and Prague 10 (5.8%).

Rents

Prime headline rents increased in Q4 2021 and ranged between €23.50–24.00 per sqm per month in the city centre, €16.00–18.00 per sqm per month in the inner city and €13.50–15.00 per sqm per month in the outer city.

Rising construction costs are also reflected in fit-out contributions and other incentives.

The members of the Prague Research Forum – CBRE, Colliers, Cushman & Wakefield, JLL, Knight Frank – share non-sensitive information intending to provide consistent, accurate and transparent data about the Prague office market. RICS supports the activities of Prague Research Forum.