ČEZ has chosen the Smíchov City project by Sekyra Group for its new headquarters. The company has already started its construction. ČEZ will purchase the new headquarters, which will include three separate buildings with a total area of 44,000 m², from Sekyra Group upon completion in 2027. In addition to domestic architects, a major Swedish architectural studio also participated in the design of the buildings. ČEZ will be located next to the large campus of Česká spořitelna, which is currently under construction. Smíchov City is the largest urbanization in central Prague since the creation of Vinohrady, not only as a residential district, but also as a significant administrative location - business hub. Thanks to these significant investments, Sekyra Group holds a dominant position in the Prague office market with a roughly 80% share in the segment of construction of administrative buildings. Smíchov City is being transformed into a full-fledged district with a balanced share of residences, administration and leisure areas. The total costs of the Smíchov City project will reach 50 billion crowns, of which 35 billion will be private and 15 billion will be public investments, which will be directed primarily towards infrastructure.
The fourth quarter of 2024 was the second quarter in a row when no office project was started in Prague. It was also the period when only one project was completed, 100Yards in the city center. The vacancy rate remains very low, increasing by only approximately 0.2 percentage points year-on-year. The total volume of modern office space at the end of 2024 reached 3.96 million square meters, which is less than in Warsaw or Budapest. The highest achievable rent in the city center is currently EUR 29.50 per square meter per month. 2025 could bring slightly higher construction activity, thus moving the market again. This is according to a regular quarterly survey by Colliers.
In the 3rd quarter, there was only a slight increase in the total area of modern office space in Prague, and it continues to be slightly above the 3.95 million m² mark. In the first nine months of 2024, 69,500 m² of office space was completed in Prague, which represents a decrease of 29% compared to the same period in 2023.
Since the beginning of the year, the office vacancy rate in Prague has increased from 7.4% to the current 8.1%, which represents the highest value this year. A total of 318,200 m² of office space was immediately available. On a year-over-year basis, the current vacancy rate is 78 bps higher than the same period in 2023.
The total rental activity for the first three quarters is 458,100 m², which represents a year-on-year increase of 27%. Renegotiations of existing contracts accounted for more than 49%, similar to the same period last year.
Net demand increased by 26% year-on-year, reaching 222,800 m² in the first three quarters of this year. Thanks to the ČS transaction, the financial sector is the most active (44% of this year's net demand).
The basic rent for class A offices in the center of Prague and in the outskirts has stabilized. It increased slightly in the wider city center.
Profile Furniture has completed the implementation of interiors of the new CEZ office building at the Dukovany nuclear power plant. The total volume of the contract reached CZK 11.4 million. The design of the building is the architectural studio DI5, which held the design inspired by the power plant itself. The project included 242 jobs, meeting rooms, dining room, classrooms and workshops and was implemented in two stages in the first half of this year.
Regional cities in the Czech Republic are becoming an increasingly interesting alternative for investors looking for cheaper, yet high-quality office space outside of Prague. That's according to the latest survey by Colliers, a leading provider of diversified professional services in commercial real estate and investment management. According to him, net realized demand in Brno grew by 43% year-on-year, in Ostrava by 127%. At the same time, prices are kept at a level that is one third to one half lower than in Prague. Even more interest in regional cities could be aroused by a better offer of serviced offices, which are of particular interest to established companies on the market in connection with the development of hybrid work and the introduction of hub & spoke or flex & core models.
With the development of work trends and a flexible approach to the working environment, coworking spaces are increasingly gaining ground in the Czech Republic. Their area grows by an average of 10-15 thousand square meters per year. Coworking spaces represent roughly 3% of all office spaces in the metropolis. In terms of square meters, Prague does not compare to Western metropolises, but within Central and Eastern Europe, this is an average value.
Last year it became clear that Prague is not only a dynamic European city, but also the second most active market for flexible offices after London. Metropolises such as Warsaw, Amsterdam and Madrid followed at a distance. This success only confirms the growing attractiveness of flexible offices in the region. Moreover, according to the real estate consulting company CBRE, the world leader in the field of commercial real estate services, the positive trend will continue this year as well.
Colliers, a leading professional services company in the field of commercial real estate and investment management, has released its forecasts for the Central and Eastern Europe region for 2024. The GDP growth rate is expected to increase and therefore the activity in the commercial market. What are the other key points and trends from the Colliers predictions?
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