The first and only completed construction of the 1st quarter of 2024 was the Roztyly Plaza building, a large office building developing the emerging office micro-location around the Roztyly metro station. The building expands the market of modern office space by 21,700 m2 and was delivered to the market partially pre-leased. The remaining volume of office construction for 2024 is approximately 58,600 m2 within 8 projects. "The good news is that, after a longer period, newly launched speculative projects have also appeared, which means the definitive end of the imaginary dry period in office development," says Josef Stanko, senior analyst at Colliers. Due to the lack of land and opportunities for development in already established office hubs, some developers are expanding the office market to new locations such as Roztyly or Hagibor in Prague 10. In the future, we will see the growth of administrative projects, especially in areas along the lines of the Prague metro, including the new line D.

Vacancy increased only slightly, the period of reconstruction begins

Despite the new addition to the market, vacancy rates rose only slightly. The reason was the removal of some older properties from the active market due to the start of preparations for upcoming renovations. "Given that the current office standard has moved far from what was considered modern in the 1990s and 2000s, as well as the complex permitting and lack of land suitable for office development in already established office micro-locations, large-scale renovations are an ideal way to transform office market. It can therefore be expected that this scenario will become more and more frequent," comments Josef Stanko.

The vacancy rate currently stands at 7.5%, a quarter-on-quarter increase of 30 b.p. There is currently approximately 292,000 m2 of vacant office space on the market for immediate lease. However, the most sought-after markets have a significantly lower vacancy rate. For example, approximately 39,400 m2 (6.7%) is available in the city center, only 13,800 m2 (2.7%) in the entire Karlín area, approximately 20,400 m2 (6.7%) in the Pankráce area, and only 7,600 m2 (3.4%).

Although prices are rising slightly, Prague is still attractive for new investors

The highest attainable rent, the so-called "prime", increased slightly on the Prague market in the 1st quarter. At the end of the quarter, rents in premium buildings in the city center were around €28.00 per m2 per month, in the best locations in the wider center €19.00 per m2 per month and in the best locations in the rest of the city at up to 16.00 € per m2 per month. "Rent price growth in Prague is unlike any other

neighboring countries only moderate and the market shows considerable stability as a result. For investors looking for a suitable destination for their branches, centers of corporate or IT services or business units, Prague remains a very attractive location that can compete with countries from the Central and Eastern European region, as well as, for example, Spain and Portugal, i.e. markets where office fields such as business services are currently growing," explains Josef Stanko, adding that the price level in Lisbon currently ranges between €21 and €28 per m2 per month, in Madrid between €24 and €37 and in Warsaw between €21 and 27 € for premium locations.