The first and only completed building in Q1 2024 was Roztyly Plaza, a large office building development in the emerging office micro-location near Roztyly metro station. The building expanded the modern office market by 21,700 sqm and was delivered to the market partially pre-leased. "The good news is that after a longer period, new speculative projects are being launched. This means a definitive end to the seeming dry spell in office development," says Josef Stanko, senior analyst at Colliers. Some developers, due to a lack of land and development opportunities in established office hubs, are expanding the office market to new locations such as Roztyly or Hagibor in Prague 10.

The vacancy rate grew only slightly, reconstruction period begins

Despite new additions to the market, vacancy grew only slightly. The reason for this was the removal of some older properties from the active market due to the start of preparations for upcoming renovations.

"Given that the current standard for office space is far from what was considered modern in the 1990s or the nought years (2000-2010), and also due to the complexity of permitting and the lack of land suitable for office development in established office micro-areas, large-scale renovations are an ideal way to transform the office market. We therefore expect this scenario to become increasingly common," comments Josef Stanko.

The vacancy rate currently stands at 7.5%, which represents a quarter-on-quarter increase of 30 basis points. However, the most sought-after markets have significantly lower vacancy rates. For example, approximately 39,400 sq. m (6.7%) is available in Prague’s city centre, only 13,800 sq. m (2.7%) in the entire Karlín area, approximately 20,400 sqm (6.7%) in the Pankrác area and only 7,600 sq. m (3.4%) in the Brumlovka complex.

Although prices are rising slightly, Prague is still attractive for new investors

The highest achievable rent, the so-called "prime", increased slightly in the Prague market in Q1. At the end of the quarter, rents in prime buildings in the city centre were at around €28.00 per sqm per month, in prime locations in the wider city centre at €19.00 per sqm per month and prime locations in the rest of the city at up to €16.00 per sqm per month. "Unlike in many neighbouring countries, rental price growth in Prague is only moderate and the market is therefore showing considerable stability. For investors looking for a suitable destination for their branch offices, corporate or IT service centres or business units, Prague remains a very attractive location that can compete with other countries from Central and Eastern Europe, as well as Spain and Portugal: markets where office sectors such as business services are currently growing," explains Josef Stanko, adding that the price level in Lisbon is currently between €21 and €28 per sqm per month, in Madrid between €24 and €37 and in Warsaw between €21 and €27 for premium locations.