PRAGUE OFFICE MARKET OVERVIEW - 2021 | CZECH REPUBLIC - WIKIBANKS
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2021 | Czech Republic Prague Office Market Overview
2
Macroeconomic overview
Q1 |Czech Republic
Research & Forecast Report | Colliers International
The Czech Republic remained consumer spending is also
in a state of emergency during expected to lead the recovery,
the entire first quarter of 2021. thanks to the accumulated
This condition was ended in savings amongst the
mid-April and lasted a total of population.
189 days. Despite some
progress of distributing the What could be surprising,
vaccine to the population, it is despite reported closures of
still quite slow in comparison hundreds of restaurants and
with other countries in Europe. even several retail brands and
As the count of new confirmed chains, is that the
cases of COVID decreases, the unemployment rate has
whole country looks forward to remained at similar levels
loosening the measures. There recorded last year, reaching
is however a long road back to 4.2% at the end of March 2021.
normality and the government, This represents approximately
both current and future (which 307,000 jobless individuals in
will be elected in autumn), the country. This rate is
must avoid the mistakes made expected to remain for some
last year. time during 2021 and even
decrease further forward in
As we could expect, the 2022, once the economy can
prolonged state of emergency operate without limitations.
affected the forecasts for GDP.
In general, we are still One big question mark still
expecting a rebound in H2 hangs over inflation. There
2021 from the current were several scenarios warning
slowdown and through 2022. about the inevitability of
According to Oxford increasing consumer prices
Economics, the forecasted however, many economists
growth for this year is 3.3%. and institutions are now
Industry and exports are still forecasting a much more
the main economic engines, conservative outlook for Czech
even with several bottlenecks Republic, ranging from 2.0% to
in supply chains that can limit 2.5% in 2021.
their outputs. By the time
shops re-open, strong
Gross domestic product 8,0
(%)
6,0
4,0
2,0
0,0
-2,0
-4,0
-6,0
-8,0
2018
2021
2011
2012
2013
2014
2015
2016
2017
2019
2020
2022
2023
2024
Czech Republic Czech Republic predictions
Eurozone Eurozone predictions
Sources: Colliers International, Oxford Economics3
Research & Forecast Report | Colliers International
Q1 |Czech Republic
Prague office market
New supply and vacancy Both projects were
refurbishments of older
The first quarter of the year properties. Hybernská 1,
can sometimes be a little located in the city centre near
overlooked, especially after náměstí Republiky, added
traditionally strong fourth 1,500 sq m and Olbrachtova 5,
quarters. But in 2021, when in Prague 4, added 2,000 sq m.
everyone in the Czech Republic With the increasing age of a
is hoping for some large part of the stock, we may
improvement either in well see many landlords
business or in life itself, the consider refurbishment or
situation on the Prague office even change of use, as a
market has broken from reaction to the city’s housing
tradition. crisis. The current modern
office stock in Prague
In the first quarter of 2021, just decreased slightly to 3.69
two developments were million sq m, due to the
completed and added a total of exclusion of several buildings
3,500 sq m to the market. This which were no longer offered
represents one of the lowest for commercial leasing.
levels in the market’s history.
Top 3 Transactions Tenant Property Transaction
of Q1 2021
Novartis Gemini Renegotiation
New Flex Centre BB Centrum B New lease
Sources: Prague Research Forum,
Colliers International Sweco Hydroprojekt Táborská 31 Renegotiation4 Q1 |Czech Republic
Research & Forecast Report | Colliers International
Modern office stock & Occupied Stock Vacant Stock
vacancy in Prague
districts 1 000 000
(sq m)
900 000
800 000
700 000
600 000
500 000
400 000
300 000
200 000
100 000
0
Prague 6
Prague 1
Prague 2
Prague 3
Prague 4
Prague 5
Prague 7
Prague 8
Prague 9
Prague 10
Sources: Prague Research Forum,
Colliers International
Vacancy rate
development Prague City Centre Inner City Outer City
9,0%
8,0%
7,0%
6,0%
5,0%
4,0%
3,0%
2,0%
1,0%
0,0%
2018 2019 2019 2019 2019 2020 2020 2020 2020 2021
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Sources: Prague Research Forum,
Colliers International
Gross take-up
(sq m) Q1 Q2 Q3 Q4
600 000
500 000
400 000
300 000
200 000
100 000
0
Sources: Prague Research Forum, 2016 2017 2018 2019 2020 2021
Colliers International5
The expected level of supply totalled 45,200 sq m in Q1.
Research & Forecast Report | Colliers International
Q1 |Czech Republic
for the remainder of 2021 is With lower levels of expected
just 65,800 sq m, from which supply, we recommend that
over 55% is already pre-leased. tenants act earlier to secure
Next year looks similar, with their desired office space,
78,300 sq m of space under particularly within new
active construction and due for projects.
completion in 2022. On the
more optimistic side, many The biggest transaction of the
projects have entered quarter was, without a doubt,
construction phases in recent the renegotiation of Novartis in
months, including the long Gemini B in Prague 4, with a
awaited Masaryčka by Penta, size of 14,300 sq m. Among the
with approximately 25,000 sq other major deals of the
m, and PORT 7 by Skanska with quarter, we include a new lease
30,600 sq m. Both projects are of flex-office centre in BB
scheduled for delivery in 2023. Centrum B in Prague 4 (3,300
Furthermore, the market has sq m), the renegotiation of
also recorded a decent Sweco Hydroprojekt in
pipeline, with numerous Táborská 31 in Prague 4 (2,900
projects waiting to secure a sq m) and the expansion of
sufficient pre-lease in order to Livesport in Aspira Business
proceed with construction or, Centre in Prague 5 (2,200 sq
as a condition of financing. m).
As for current vacancy, we are Although sub-leases have
experiencing a slow, but attracted a lot of attention on
increasing trend. By the end of the market recently, they only
Q1 2021, approximately 7.6% contributed to Q1 take-up with
of modern offices in Prague a 4% share, or 3,600 sq m in
were vacant, representing total. But to remain objective,
280,600 sq m. This represent several units that were
an increase of 60 basis points available for sub-lease, were
quarter-on-quarter and 220 re-claimed by the respective
bps year-on-year. In addition to landlords and leased directly.
this, the sublease market is still
quite strong and offers a Rents and incentives
further 75,500 sq m of space
for a variety of conditions, Although vacancy is rising
including below market slightly, demand is still solid
standard prices and contract and occupiers who are
assignments. currently looking for new
offices have a wider range of
Demand choices. Thanks to this fact,
landlords are offering higher
Take-up in Q1 is sometimes fit-out contributions and
overshadowed by strong slightly longer rent-free
demand at the end of the year, periods, than we were
but in the current quarter, the recording in 2019. However,
numbers are a bit more reality strongly differs by
optimistic. Gross take-up developer or property
accounted for 90,200 sq m, an condition. Prime headline rents
increase year-on-year of 30%. in the city centre remained at
Demand is still strongly driven the previous range of €22.00 to
by renegotiations, as they €22.50. Rents for the best
represent share of 46% on the inner-city offices range
gross figure. Pre-leasing activity between €15.50 and €17.00
accounted for an 11% share on and prime office space in outer
gross take-up. city locations can be leased
Net demand, calculated from monthly for between €13.50
newly leased space, and €15.00 per sq m.
expansions and pre-leases6
Key market figures
Q1 |Czech Republic
Research & Forecast Report | Colliers International
Office Stock (sq m) Vacancy Rate
3.69 mln 6.7%
Q1 Gross Demand (sq m) Prime Rent
90,200 €22.50
Q1 Supply (sq m) Under Construction (sq m)
3,500 199,700
Outlook One promising fact is that
some of the largest, or most
As the government plans for significant projects, which have
lifting the restrictions are in been anticipated for years,
sight, and public testing and have entered construction
vaccination processes are phases, or are very close to it.
already under way, we believe Therefore, the pipeline new
that we will soon get at least supply for 2023 and beyond
some idea about the condition could well be above average
and also about the intentions again. A question mark
of companies active on the however still hangs over the
Prague office market. It is new building law and if it will
certain that an acceleration of really positively impact the
activity on the market will not permitting process, as a
be immediate. We still expect number of the proposed
the vacancy rate to rise by projects have been stuck in this
additional basis points, but it process for years.
will be inevitably softened by
low supply at some point in
near future.For more information
Office Agency Research & Forecasting
Petr Žalský Josef Stanko
+420 601 056 858 +420 728 175 024
petr.zalsky@colliers.com josef.stanko@colliers.com
Managing Partner
Tewfik Sabongui
+420 777 150 669
tewfik.sabongui@colliers.com
This report gives information based primarily on Colliers International data, which
may be helpful in anticipating trends in the property sector. However, no warranty is Na Příkopě 859/22
Slovanský dům B/C
given as to the accuracy of, and no liability for negligence is accepted in relation to,
the forecasts, figures or conclusions contained in this report and they must not be
relied on for investment or any other purposes. This report does not constitute and
must not be treated as investment or valuation advice or an offer to buy or sell 110 00 Praha 1
property. ( May 2021 ) © 2021 Colliers International.
Colliers International is the licensed trading name of Colliers International Property
Advisers UK LLP which is a limited liability partnership registered in England and
Wales with registered number OC385143. Our registered office is at 50 George
Street, London W1U 7GA.You can also read
