PRAGUE, OCTOBER 4, 2023 - More and more companies are considering regional expansion, but the lack of suitable office space is preventing them from doing so. In regions outside of Prague or Brno, there is not only a shortage of modern space for rent, but also a lack of flex operators. They could benefit from the growing interest of international companies in the Hub & Spoke or Flex & Core model. This is according to information from Colliers, a leading provider of diversified professional services in commercial real estate and investment.

"The number of companies looking for quieter locations or expanding into the regions is steadily growing. They are attracted both by the lower costs of renting office space and easier access to human resources. Unfortunately, in the regions, companies often encounter problems with the availability of suitable office space and it looks like the situation will not improve in the near future," explains Jana Vlková, Director of Workplace Advisory and Office Agency at Colliers, adding that demand is growing especially in Ostrava, Olomouc, Ústí nad Labem, Hradec Králové and Plzeň, where, however, modern office stock is usually only between 30,000 and 100,000 sqm. And although there is a relatively good supply of future projects, for economic reasons, in many cases their delivery is delayed or postponed.

Prices of office space many times lower than in Prague

Compared to Prague, where the most expensive and exclusive office projects in the city centre rent for EUR 27 per sqm, rental prices in regional cities are three times lower. For example, premium space in Ostrava or Plzeň costs EUR 13.50 to 14.00 per sqm per month, in Olomouc EUR 9.20 to 13.90, in Ústí nad Labem EUR 6.30 to 10.50 and in Hradec Kralove EUR 7.00 to 8.80. The lowest rents are in the Zlín, Vysočina and Liberec regions, where companies usually pay EUR 5.00 to EUR 8.80 per 1 m2 per month.

People and wages up to 30% lower are the main attraction

Companies from the business and IT services sector, for example, are looking for regions as another location for their Prague or Brno headquarters. According to the ABSL association, this sector, which already employs nearly 160,000 skilled workers, is looking in particular at Ostrava, Olomouc, Hradec Králové and Pilsen. "This is mainly due to the post-pandemic transformation of the working environment and the interest of these international companies in concepts such as Hub & Spoke, in which companies reduce the size of the main office and supplement it with smaller spaces in different locations, or Flex & Core, which combines a smaller main office with membership in one or more co-working centres," Jana Vlková describes. However, people play a major role in this transformation. In Prague, where the current unemployment rate is just 3.1%, employers have long struggled with a very low availability of job seekers. Unemployment rates are usually higher in regional cities, and this increases the chances of finding the labour needed, even at lower wages. While the average monthly wage in Prague was CZK 52,833 in the second quarter, according to the CZSO, it was only CZK 41,912 in the South Moravian Region, CZK 41,249 in the Hradec Králové Region, CZK 39,108 in the Moravian-Silesian Region, CZK 39,589 in the Ústí Region and CZK 38,488 in the Olomouc Region.