Key findings

• COVID-19 had an impact on market activity and postponed several completions of new office projects throughout 2020
• Shift from speculative construction to pre-leased backed more common among developers
•  Share of immediately available space for sublease keeps increasing
•  Vacancy rate at healthy 7%, virtually no change q-o-q
•  Planned supply for 2021 below average
•  No new project commenced in Q4 2020
• The prime rent stays between €22.00 and €22.50 per sqm

Office stock and new supply

A total volume of 19,700 sqm of modern office space was delivered to the market in the last quarter of 2020, bringing the total modern office stock to 3.75 million sqm. During 2020, the total volume of 150,500 sqm was delivered. One project was completed during the fourth quarter, refurbishment of the historically protected Bubenská 1 in Prague 7 with 19,700 sqm. The project is currently 100% occupied.

Projects under construction amount to 136,400 sqm and approximately 98,100 sqm is expected to be delivered in 2021. From this volume, 34,400 sqm is expected to be completed in Q1 2021. No construction commenced during the fourth quarter of last year.

Class A office stock has a ca. 72% share on the total office supply, whereas the top-quality Class AAA properties accounted for over 16%.

The total volume of space immediately available to sublease in Q4 2020 accounted for 64,300 sqm, which is an increase of 36% (or 17,100 sqm) compared to the previous quarter.

Office take-up

Gross take-up (including renegotiations and subleases) in the fourth quarter of 2020 amounted to 98,700 sqm, representing a 17.6% increase on the previous quarter but a 33% decrease in a year-on-year comparison.

The highest demand in Q4 2020 was recorded in the city districts of Prague 4 (22%), followed by Prague 8 (16%) and Prague 7 (15%). The most active companies were from the advertising/media sector (18%) followed by the professional services sector (14%) and the IT sector (12%).

The share of renegotiated leases in the fourth quarter of 2020 reached 51%. Net demand (new leases, expansions and pre-leases) accounted for 44% of the total gross take-up and the share of subleases accounted for 5%.

Major office leasing transactions

The major transactions of the fourth quarter of 2020 were all renegotiations including Internet Mall (6,300 sqm) in Gen in Prague 7, Havel & Partners (5,200 sqm) in Florentinum in Prague 1 and NET4GAS (4,800 sqm) in Kavčí Hory Office Park in Prague 4. The biggest new occupation was TNT/Fedex (3,800 sqm) in Kotelna Park II in Prague 5. A positive sign is the increase of the share of pre-construction deals on total take-up. Developer Crestyl managed to secure over 7,000 sqm for their project Hagibor through pre-leases, which will contribute to commencing construction.  

Office vacancy

The share of vacant office space in Q4 2020 remained at 7.0% with virtually no change in comparison with the previous quarter. The vacant space totalled 261,600 sqm. The largest availability was in Prague 5 with 57,100 sqm, representing a vacancy rate of 8.8% and followed by Prague 4 with 56,200 sqm and a vacancy rate of 5.8%. The lowest amount of vacant space was recorded in Prague 2 with 5,100 sqm (a vacancy rate of 3.6%) and in Prague 3 with 6,600 sqm (5.4%).

Rents

Although the vacancy rate increased in 2020 and overall activity slowed down, prime headline rents remained stable and stood between €22.00-22.50/sqm/month in the city centre at the end of Q4 2020. Inner-city prime rents ranged from €15.50-17.00/sqm/month and from €13.50-15.00/sqm/month in the outer city.

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