The Prague Research Forum announced new office market figures for the third quarter of 2022. The members of the Prague Research Forum – CBRE, Colliers, Cushman & Wakefield, JLL, Knight Frank, supported by associated member Savills – share non-sensitive information intending to provide consistent, accurate and transparent data about the Prague office market. RICS supports the activities of the Prague Research Forum.

Key figures

• Gross take-up increased by 40% year-on-year
• The vacancy rate slightly decreased to 8.1%
• Three office buildings were completed in Q3 2022
• Almost 191,300 sqm of office space was under construction by the end of Q3 2022
• Net absorption was positive in the third quarter and reached 24,100 sqm
• The prime rent has risen again to €26.00-26.50 per sqm per month

Office stock and new supply

The total size of modern office stock in Prague reached 3.8 mils. sqm at the end of the third quarter of 2022. During Q3 2022, a total of 18,200 sqm of new modern office space was completed in Prague - two new office buildings: Košíře Office Park (5,300 sqm) in Prague 5 and Bastion Florenc (3,400 sqm) in Prague 8, and one refurbished building VIA UNA (9,600 sqm) in Prague 1. By the end of the year, we expect three more projects with a total office space of 11,500 sqm to be completed. Over 191,300 sqm of office space was under construction at the end of Q3 2022, with completion scheduled between 2022 and 2024; most of the space under construction is in Prague 1 (19.5%), Prague 5 (19%) and Prague 7 (17%).

No construction or reconstruction of any office building commenced in the third quarter. Most of the modern office supply (74%) consists of Class A buildings, with the highest quality AAA-rated space at 651,500 sqm, accounting for more than 17% of the total office stock.

Office take-up

Total gross take-up (including renegotiations and subleases) reached 137,700 sqm in the Q3 of 2022, representing an 11% quarter-on-quarter increase and a year-on-year increase of 40%. The highest gross take-up in the third quarter was recorded in Prague 8 (24.5%), followed by Prague 1 (24%) and Prague 4 (16%). Companies operating in the IT (16%), Professional Services (14%) and Finance sector (14%) accounted for the highest share of demand for offices. New leases of existing space and expansions accounted for 50% of the total gross take-up, while pre-leases of new offices under construction accounted for 9%. Renegotiations of existing contracts represented 40%. The remaining 1% is for subleases of already leased space. 

Major office leasing transactions

The largest transaction in the Q3 of 2022 was the renegotiation of KPMG (11,000 sqm) in KPMG Office Centre in Prague 8, followed by the pre-lease of Fio banka (5,400 sqm) in Masaryčka in Prague 1 and the new occupation of Škoda Auto (4,700 sqm) in AFI City in Prague 9.

Office vacancy and net absorption

The office vacancy rate in Q3 2022 decreased by 20 bps compared to the previous quarter to 8.1%. The total vacant office space reached 308,000 sqm at the end of the quarter. The highest vacancy rates were recorded in Prague 3 (25%) and Prague 9 (18%), the lowest in Prague 8 (5%) and Prague 7 (6%). The majority of vacant space was registered in Prague 4 (66,300 sqm) and Prague 5 (46,000 sqm), contrary there was hardly any vacant space reported in Prague 2 (9,800 sqm) and Prague 10 (11,500 sqm). Net absorption reflects the change in occupied office space on the market over a given period. The occupied office space increased by 24,100 sqm compared to the previous quarter.

Rents

Prime rents in the third quarter of 2022 increased again and ranged between €26.00-26.50 per sqm per month in the city centre, €17.50-18.00 per sqm per month in the inner city and €15.00-16.00 per sqm per month in the outer parts of the city. While rents for newly completed buildings in the best locations have been rising steadily since the beginning of the year (currently, by 18% year-on-year), the pace of rent growth for existing office buildings is not that substantial.