A Warning for Prague Office Occupiers
The summer months have seen a surprising uptick in demand from office occupiers, particularly larger occupiers looking for prime office space in new buildings. An unpleasant surprise for many of these occupiers is the lack of available space and the increased asking rents in new buildings, particularly in locations such as Karlin, Andel and the City Centre.
There are a number of reasons for this such as:
• Increased interest in more central locations from occupiers trying to entice their workforce back to the office.
• A lack of supply, which will only get worse, caused by the absence of new developments. No new office developments have started construction in Prague for over a year now!
• A willingness on the part of occupiers to pay higher rents on a per sqm basis, as in many cases they are downsizing their overall office space.
• The increased construction costs on new buildings as a result of the post pandemic surge in construction prices.
• Increased interest rates, leading to increased financing costs and higher exit yields resulting in landlords increasing asking rents in order to make new projects economically viable.
Unfortunately for occupiers we expect this situation to get worse over the coming months particularly in new buildings and popular inner-city locations. It will likely remain a landlord’s market until a significant amount of new office space will be delivered to the market. This is potentially a couple of years away yet.
We will be happy to advise you on renting office space. Please contact us if you have any questions.
Jan Babka
Jana Pavlíčková
T +420 722 903 777
M jana.pavlickova@cz.knightfrank.com
Nikol Ruszin
