Prague Research Forum Announces the Office Market Figures for Q2 2020
Office Stock and New Supply
A volume of 88,000 sq m of modern office space was delivered to the Prague market in the second quarter of 2020, bringing the total modern office stock to 3.71 million sq m. New completions include seven properties in five new developments. The Flow Building in Prague 1 with 14,100 sq m, Parkview in Prague 4 with 15,300 sq m, DOCK IN FOUR with 20,400 sq m, J&T HQ with 15 300 sq m and Praga Office&Garden with 2,100 sq m all three located in Prague 8. Two buildings were refurbished: BB Centrum B with 14,600 sq m and Sixty House with 5,500 sq m both in Prague 4.
In Q2 2020, no projects commenced construction. Approximately 62,900 sq m of offices is expected to be completed in 2020. Further 104,000 sq m of office space is already under construction with scheduled completion in 2021 and 2022.
A-class office stock has a ca. 71% share on the total office supply, whereas the top-quality AAA-class properties accounted for almost 18%.
Gross take-up (including renegotiations and subleases) in the second quarter of 2020 amounted to 79,000 sq m, representing an 14% increase on the previous quarter and a 21% decrease in year-on-year comparison.
The highest demand in Q2 2020 was recorded in the city districts of Prague 4 (24%), followed by Prague 1 (23%) and Prague 7 (16%). The most active companies were from the consumer goods sector (14%) followed by the IT sector (12%) and the finance sector (12%).
The share of renegotiated leases in the second quarter of 2020 reached 42.6%. Net demand (new leases, expansions and pre-leases) accounted for 56.4% of the total gross take-up.
Major Office Leasing Transactions
The major transactions of the second quarter of 2020 were the renegotiation of Plzeňský Prazdroj (5,500 sq m) in Myslbek in Prague 1, followed by the new occupation of Technická správa komunikací hl. m. Prahy in Centrum Stromovka (4,300 sq m) in Prague 7, the renegotiation of CGI Logica in City West C2 (3,300 sq m) in Prague 5 and the new occupation of Scott & Weber in City Element (2,800 sq m) in Prague 4.
The share of vacant office space in Q2 2020 reached 6.1%, representing an increase of 80 basis points in comparison with the previous quarter. The vacant space totalled 225,900 sq m. The largest availability was in Prague 5 with 60,700 sq m, representing a vacancy rate of 9.3% and followed by Prague 4 with 48,300 sq m and a vacancy rate of 5.0%. The lowest amount of vacant space was recorded in Prague 9 with 3,100 sq m (vacancy rate of 2.0%) and in Prague 2 with 4,700 sq m (3.3%).
Prime headline rents stood between €22.50 and €23.00/sq m/month in the city centre at the end of Q2 2020. Inner city prime rents ranged from €15.50 to €17.00/sq m/month and from €13.50 to €15.00/sq m/month in the outer city.