Office stock and new supply

A volume of 51,800 sqm of modern office space was delivered to the Prague market in the second quarter of 2019, bringing the total modern office stock to 3.57 million square meters. New completions include 5 properties in 3 new developments: ČSOB HQ. II in Prague 5 with 30,000 sqm of office space, Praga Studios in Prague 8 with 10,600 sqm and Mayhouse in Prague 4 with 7,300 sqm and two refurbished buildings in Prague 1: Palác ARA with 2,600 sqm and Na Poříčí 5 with 1,300 sqm.

Development of three new office buildings commenced during Q2 2019, a new construction of two projects: DOCK IN FIVE in Prague 8 (21,600 sqm) and Nova Radnice in Prague 12 (8,000 sqm) and refurbishment of project Riveroff Office House in Prague 7 (1,900 sqm). There is currently about 317,800 sqm of modern office space under construction, of which 122,100 sqm is expected to be completed by the end of 2019. The remaining space has planned completion in 2020 and 2021.

Class A office stock has about 72% share in the total office supply, whereas the top-quality Class AAA properties accounted for almost 23%.

Office take-up

Gross take-up (including renegotiations and subleases) in the second quarter of 2019 amounted to 100,600 sqm, representing a 9% decrease on the previous quarter and 30% decrease on the second quarter of 2018.

The highest demand in Q2 was recorded in the city districts of Prague 8 (38.8%), Prague 4 (27.7%) and Prague 5 (10.2%). The most active companies were from the finance sector (24.3%), followed by public sector (14.3%) and IT sector (12.9%).

The share of renegotiated leases in the second quarter of 2019 reached 49.7%. Net demand (new leases, expansions and pre-leases) accounted for about 50.1% of the total take-up.

Major office leasing transactions

The major transactions of the second quarter of 2019 were the renegotiation of Clearstream (17,100 sqm) in Futurama Business Park in Prague 8, followed by another renegotiation for State Environmental Fund in The Square (7,100 sqm) in Prague 4.

Office vacancy

The share of vacant office space in Q2 2019 reached 4.6%, an increase of 30 basis points in comparison with the results of Q1 2019. The vacant space totalled 162,500 sqm. The largest availability was in Prague 5 with 43,400 sqm, representing the vacancy rate of 6.9% in the district, followed by Prague 4 with 43,400 sqm and the vacancy rate of 4.5%. The lowest amount of vacant space was in Prague 3 with 2,400 sqm (a vacancy rate of 1.9%) and in Prague 10 with 3,400 sqm (2.5%).

Rents

With low vacancy rate, the pressure on rental increase continued. Prime headline rents in the city centre stood between €22.00 and €22.50/sqm/month in the city centre in the end of Q2 2019. The inner city prime rents ranged from €15.50 to €17.00/sqm/month and the outer city from €13.50 to €15.00/sqm/month.

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