The total net leasing activity in Q2 2021 increased by 4% year-on-year
Prague Research Forum Announces Office Market Figures for Q2 2021
- In Q2 2021, market was dominated by new leases in existing premises
- Vacancy rate further slightly increased to 7.8%
- Share of immediately available space for sublease decreased by 14% q-o-q
- Net absorption was positive and reached 38,100 sq m in Q2
- Annual supply in 2021 is expected to be the lowest since 2016
- No office projects commenced construction during Q2 2021
- The prime rent stays between 22.00 and 22.50 EUR/sq m/month
The Prague Research Forum is pleased to announce the office market figures for the second quarter of 2021. The members of the Prague Research Forum – CBRE, Colliers International, Cushman & Wakefield, JLL, Knight Frank – share non-sensitive information with the aim of providing clients with consistent, accurate and transparent data about the Prague office market. RICS supports the activities of Prague Research Forum.
Office Stock and New Supply
A total volume of 49,500 sq m of modern office space was delivered to the market in the second quarter of 2021. New completions include four properties, all newly built projects: Bořislavka with 25,400 sq m of office space in Prague 6, Astrid Offices with 3,500 sq m in Prague 7, and Mississippi House with 13,300 sq m and Missouri Park with 7,300 sq m in Prague 8. Prague modern office stock increased to 3.73 million sq m. Projects under construction amounts to 147,300 sq m with approximately 14,600 sq m due in the second half of 2021, the remaining 132,700 sq m is scheduled in the years 2022-2023. During Q2 2021, neither new nor refurbished project commenced construction. A-class office stock has a ca. 73% share on the total office supply, whereas the top-quality AAA-class properties accounted for over 17%. The total volume of space immediately available to sublease in Q2 2021 accounted for 65,000 sq m, which is a decrease of 14% compared to the previous quarter.
Gross take-up (including renegotiations and subleases) in the second quarter of 2021 amounted to 89,300 sq m, representing a 5% decrease on the previous quarter but a 10% increase in year-on-year comparison. The highest demand in Q2 2021 was recorded in the city districts of Prague 8 (21%), followed by Prague 1 (18%) and Prague 4 (14%). The most active companies were from the Professional services sector (13%), followed by the Public sector (10%) and the Consumer Goods sector (10%). The share of renegotiated leases in the second quarter of 2021 reached 37%. Net demand (new leases, expansions and pre-leases) accounted for 55% of the total gross take-up and the share of subleases accounted for the remaining 8%.
Major Office Leasing Transactions
The largest transactions of the second quarter of 2021 were the new occupation of Ministry of Industry and Trade (3,700 sq m) in Václavské náměstí 42 in Prague 1, followed by the prelease of undisclosed US company from Life Science sector (3,500 sq m) in Dock in Five in Prague 8, the new occupation of VŠCHT (3,200 sq m) in Jankovcova 23 in Prague 7 and the sublease of Košík (Rockaway Group) (3,000 sq m) in Blox in Prague 6.
Office Vacancy and Net Absorption
As of Q2 2021, Prague Research Forum includes net absorption figure amongst the key office market indicators. Net Absorption represents the change in the occupied stock within a market during the survey period. In Q2 2021, net absorption was positive and reached 38,100 sq m. However, due to strong new office supply, which exceeded net absorption, vacancy rate increased slightly by 20 bps to the level of 7.8%. The vacant space totalled 291,400 sq m as of Q2 2021. The largest availability was in Prague 4 with 70,900 sq m, representing a vacancy rate of 7,3% and followed by Prague 5 with 57,300 sq m and a vacancy rate of 9,0%. The lowest amount of vacant space was recorded in Prague 2 with 5,900 sq m (vacancy rate of 4.4%) and in Prague 3 with 7,400 sq m (6.1%).
Despite the rising vacancy rate prime headline rents remained stable and stood between €22.00 and €22.50/sq m/month in the city centre at the end of Q2 2021. 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.