October 27, 2014
2014 will still have highest level of office completion since 2008
The Prague Research Forum is pleased to announce the office market figures for the third quarter of 2014. The members of the Prague Research Forum – CBRE, Colliers International, Cushman & Wakefield, DTZ, JLL – share non-sensitive information with the aim of providing clients with consistent, accurate and transparent data about the Prague office market.
Total modern office stock in Prague remained stable in the third quarter of 2014 and totaled 2.96 million square meters. A-class properties represent approximately 67 percent of the modern stock; B-class properties represent the remaining 33 percent. Top quality AAA class offices reached 264,800 sqm with a share of 9 percent on total office stock.
After strong second quarter of 2014, no new office buildings were completed in Q3 2014. Around 103,600 sqm of office space is under construction with planned completion by 2014 year end. Thus a total 180,700 sqm should be completed in Prague this year, the highest level since the record year 2008. Major projects with expected delivery in Q4 2014 include BB Centrum Delta (32,500 sqm) in Prague 4, ArtGen (22,900 sqm) in Prague 7 or The Blox (16,300 sqm) in Prague 6.
In the course of Q3 2014, no new office buildings started construction.
Gross take-up (including renegotiations) in the third quarter amounted to 93,100 sqm, which represents an increase of 53 percent compared to the previous quarter and 77 percent year on year.
The highest volume of gross take-up was recorded in Prague 4 (40 percent), Prague 8 (16 percent) and Prague 1 (14 percent).
Insurance companies were most actively leasing or renegotiating office space (35 percent of gross take-up) followed by professional services (15 percent) and manufacturing companies (15 percent).
The total share of renegotiations of gross take-up increased from 43 percent in Q2 2014 to 55 percent in Q3 2014.
Significant Office Leasing Transactions
The most significant transactions of the third quarter of 2014 were the renegotiation of Česká pojišťovna (32,200 sqm) in two buildings in Prague 4, the renegotiation of ExxonMobil (8,600 sqm) in Atrium Flora in Prague 3, and the new lease of NRC Česká republika (3,700 sqm) at River Garden II in Prague 8.
The vacancy rate decreased to 14.0 percent by 0.6 percentage points in Q3 2014. Total vacant space amounted to 416,100 sqm. The highest vacancy rates were recorded in Prague 7 (26.6 percent), Prague 9 (24.4 percent) and Prague 2 (23.9 percent). Conversely, the lowest vacancy rates were recorded in Prague 4 (6.3 percent), Prague 10 (7.3 percent) and Prague 3 (11.9 percent).
Prime headline rents in all three submarkets remained stable in Q3 2014. Prime headline rents in the city center vary between €18.50 – 19.50/ sqm/ month, in the inner city between €15.00 and 17.50 / sqm/ month and in the outer city between €13.00 and 14.50 / sqm/ month.