The Prague Research Forum is pleased to announce the office market figures for the fourth quarter of 2019.
Office Stock and New Supply
A volume of 90,100 sq m of modern office space was delivered to the Prague market in the fourth quarter of 2019, bringing the total modern office stock to 3.67 million sq m. Completions include 6 properties: five were new buildings – Harfa Office Center in Prague 9 with 27,100 sq m, Telehouse in Prague 6 with 20,900 sq m, SmíchOFF with 9,600 sq m and Green Point with 7,500 sq m, both located in Prague 5 and Centrum Stromovka in Prague 7 with 5,700 sq m. The last completed property was refurbishment of Centrum Vinice in Prague 10 with 19,300 sq m. Overall in 2019, a total of 203,000 sq m of office space was delivered to the market.
The construction of one office building commenced during Q4 2019, it includes the refurbishment of Na Příkopě 33 in Prague 1 with 7,500 sq m. The current pipeline under construction amounts to 246,700 sq m, with 174,600 sq m due in 2020 and the remaining 72,000 sq m in 2021.
A-class office stock has a ca. 74% share on the total office supply, whereas the top-quality AAA-class properties accounted for almost 22%.
Gross take-up (including renegotiations and subleases) in the fourth quarter of 2019 amounted to 147,400 sq m, representing an 83% increase on the previous quarter and a 17% decrease year on year. Overall in 2019, the total gross take-up reached 439,000 sq m, representing a decrease of 18% in year-on-year comparison.
The highest demand in Q4 2019 was recorded in the city districts of Prague 4 (33%), Prague 8 (20%) and Prague 5 (13%). The most active companies were from the professional services sector (26%), followed by the consumer goods sector (14%) and the IT sector (13%).
The share of renegotiated leases in the fourth quarter of 2019 reached 41%. Net demand (new leases, expansions and pre-leases) accounted for 58% of the total gross take-up.
Major Office Leasing Transactions
The major transactions of the fourth quarter of 2019 were the renegotiation of PricewaterhouseCoopers (13,400 sq m) in City Green Court in Prague 4, followed by the pre-completion lease of Fortuna in Churchill II (8,400 sq m) in Prague 2, the renegotiation of Nestlé in Nestlé HQ (7,100 sq m) in Prague 4 and the pre-completion lease of Adastra in Mississippi House (7,000 sq m) in Prague 8.
The share of vacant office space in Q4 2019 reached 5.5%, representing an increase of 40 basis points in comparison with the previous quarter. The vacant space totalled 201,100 sq m. The largest availability was in Prague 5 with 49,600 sq m, representing a vacancy rate of 7.7% and followed by Prague 4 with 46,100 sq m and a vacancy rate of 4.8%. The lowest amount of vacant space was recorded in Prague 2 with 2,700 sq m (vacancy rate of 2.0%) and in Prague 9 with 4,100 sq m (2.6%).
With the low vacancy rate and raising construction costs, the upward pressure on rents continues. Prime headline rents in the city centre stood between €22.50 and €23.00/sq m/month in the city centre at the end of Q4 2019. 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.