Office market news Q2/2024: Prime rent in Prague city centre reaches 30 EUR/sq m/month!

– Total office space in Prague was 3.95 million sqm at the end of June. Several buildings were completed in Q2 2024. Within the Hagibor project in Prague 10, developer Crestyl completed two buildings, Hagibor 01 (which is fully occupied by Czech News Center) and Hagibor 02. In addition, the Rohan City project has completed the A1 building and the last completed building is the reconstruction of Palác Dunaj in Prague 1. In total, 43,900 sqm of space has been added, with approximately 14,700 sqm still to be completed by the end of the year.

– 166,300 sqm is currently under construction. New construction has started in Prague 4 in the Brumlovka complex, where a new multifunctional Hila building with 19,700 sqm of office space is under construction, and as part of the Smíchov City project, the second stage of construction, Smíchov City South, was launched in June, where construction has started on a total of 7 office buildings (119,200 sqm), of which 4 buildings with a total office space of 75,000 sqm will be owned by Česká spořitelna, which will have its headquarters there. 80,300 m2 of office space is expected to be completed in 2024. In 2025, only 43,100 m2 should be completed.

– The vacancy rate increased slightly, with over 311,000 sqm of vacant space in Prague at the end of Q2. Quarter-on-quarter, the vacancy rate increased by 44 basis points to 7.9%. Year-on-year by 92 basis points. If we add the “grey vacancy”, i.e. space offered for sublease, the vacancy rate in Prague would be 9.4%.

– Net absorption, or change in occupancy, increased by 23,100 sqm quarter-on-quarter, mainly due to new projects that were successfully let at the time of completion or shortly after completion.

– Total take-up in the second quarter was 220,600 sqm, of which net take-up (excluding renegotiations) was only 130,700 sqm. As the total demand includes owner-occupied transactions, this volume also includes the Česká spořitelna transaction (75,000 sqm), which was reflected in both total and net demand (without renegotiations). Renegotiations accounted for 38% of the total demand. If the total demand is ‘netted’ of the Česká spořitelna transaction, renegotiations would represent 58% of the total demand. The largest transaction in Q2 was the pre-letting of Česká spořitelna
(75,000 sqm) in a complex of 4 buildings within the Smíchov City South project, followed by Vodafone’s renegotiation (and space reduction) in the City West C1 building in Prague 5 (10,000 sqm).

– Prime rents in the city centre increased slightly to EUR 30.0/sqm/month, in the Inner City they were around EUR 18.50/sqm/month and in the Outer City EUR 15.00/sqm/month