Prague's Office Market Boom: Up to 600,000 sqm of New Space by 2029

Prague Office Market: A Snapshot of Growth and Demand

The Prague office market is poised for substantial growth, offering promising prospects for businesses. Currently, the total market volume stands at 3.94 million square meters. While Q2 2025 saw only two projects completed, bringing the total new construction for 2025 to a relatively low 26,600 sqm, construction activity has picked up, with four new projects launched, bringing the total volume under construction to 212,600 sqm.

Despite limited new supply recently, the market remains tight. The vacancy rate in Prague continued to fall, reaching 6.6% at the end of Q2 2025, a year-on-year decrease of 1.3 percentage points. Gross realized demand for H1 2025 was robust at 253,100 sqm, mirroring levels from the previous two years. Net demand, excluding owner-occupied transactions, was 97,400 sqm, nearly matching the volume of renegotiations and subleases (94,700 sqm).

Future Supply: Anticipated Office Space Development

The real shift is expected in the coming years. By 2029, Prague could see an increase of up to 600,000 sqm of new office space, primarily between 2027 and 2029. This represents a crucial influx of much-needed new office premises. While project completion dates may shift, even half of the potential planned developments would significantly boost the market's supply.

A notable trend is the anticipated launch of five additional projects by the end of 2025, totaling 119,500 sqm, all located in Prague 4. This strategic development could re-center the rental market's gravity back to Pankrác, Brumlovka, and Roztyly, areas that have seen limited new projects in recent years.

Significant pre-lease transactions are already shaping the future market. ČEZ, for example, will occupy three newly acquired buildings in the Smíchov City project (next to the Česká Spořitelna Campus) starting in 2028. Additionally, Creditas Bank recently commenced construction on its future headquarters within the Rohan City A2 project. These two transactions alone account for approximately 61,000 sqm of future office space.

Key Office Hubs: Vacancy Rates and Opportunities

Vacancy rates vary significantly across Prague's office hubs as of Q2 2025:

Rental Trends and Forecasts in Prague

Current benchmarks for the Prague office market remain stable. Prime office rents in the city center are around €30 per sqm per month. In the wider city center (Karlín, Smíchov, Pankrác), rents increased by €0.50 quarter-on-quarter to €20.50. Areas further from the center maintain stability at €16.50 per sqm per month.

Looking ahead, strong transactional and construction activity suggests a rapid increase in benchmark rents, particularly in the wider city center. Expectations are for prime rents to rise to €35 in the city center and €25 in the wider city center.

Navigating Prague's Competitive Office Market

The current market outlook is optimistic, characterized by professionalism, transparency, and competitiveness at a European level, which continues to attract investors. While some sought-after locations favor landlords due to limited availability, opportunities still exist for tenants who act quickly or are open to compromise. The search and negotiation phase can now last 12 months or even longer, underscoring the need for proactive engagement.

A notable shift is the increasing importance of pre-leasing. Historically rare, securing tenant commitment before construction begins is becoming a decisive factor for projects to obtain financing. This evolving dynamic means that businesses planning their office expansion should consider this approach to secure their desired space in the future supply.

Source: hypoindex.cz