The Current State of Prague's Office Market
For businesses looking for office space in Prague, the market presents a challenging yet dynamic environment. The city is grappling with a pronounced supply shortage, reflected in a continued decline of the office vacancy rate, which stood at a remarkably low 6.6% at the end of Q2 2025 – a significant 1.3 percentage point year-on-year decrease. This tight market signifies strong demand, with gross realized demand in the first half of 2025 reaching 253,100 sqm. Net demand was 97,400 sqm, nearly matched by renegotiations and subleases, indicating that many existing tenants are choosing to stay or adjust within their current arrangements. Notable pre-leases, such as those by ČEZ and Creditas Bank for owner-occupied projects in Q2 2025, totaling approximately 61,000 sqm, further underscore the strong appetite for new, quality office space even before completion.
Construction Activity: A Glimmer of Future Supply
While the immediate supply of new office space in Prague remains constrained, there's a surge in construction activity pointing to a more balanced market in the coming years. Q2 2025 saw the launch of four new office projects, with an additional five projects (totaling 119,500 sqm) expected to commence by the end of 2025. Much of this new development is concentrated in key areas like Prague 4. However, only a modest 26,600 sqm of new office space is anticipated for completion in 2025, meaning the immediate shortage will persist. The good news for businesses planning for the medium to long term is the projection of a substantial influx of up to 600,000 sqm between 2027 and 2029, promising more options in the future.
Understanding Prague Office Rental Costs
The supply-demand imbalance is naturally impacting office rental prices across Prague. Businesses must budget accordingly for prime locations. Currently, prime rents in Prague city centre are around €30/sqm/month. In the wider centre areas, including popular districts like Karlín, Smíchov, and Pankrác, rents have increased to €20.50/sqm/month. For areas further from the city centre, rents have remained stable at €16.50/sqm/month. Looking ahead, further rent increases are widely anticipated. Projections suggest city centre rents could reach €35/sqm/month, with wider centre locations potentially climbing to €25/sqm/month. This upward trend highlights the importance of securing favorable terms early or exploring slightly less central but still well-connected districts.
Strategic Planning for Businesses Seeking Office Space
Given the current dynamics, businesses seeking to rent office space in Prague should adopt a proactive strategy. If immediate occupancy is required, be prepared for a competitive environment and potentially higher rental costs, especially in prime locations. Considering pre-leasing opportunities in ongoing or upcoming projects, particularly in developing areas like Prague 4, could be a smart move to secure space and potentially better terms for future occupancy. For those with a longer planning horizon, the significant projected supply between 2027 and 2029 offers promising prospects for a wider selection of modern office facilities. Evaluating various districts, not just the city centre, and understanding the long-term rental trends will be crucial for making an informed decision for your business's future in the Prague office market.
Source: property-forum.eu
