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CBRE: 2015 Offers the ideal conditions for renting offices

Tenants are dictating the terms, saving up to 30% of the original price with real estate agents.

• Landlords are offering advantageous incentive packages (rent holidays, fitting out at the lessor’s expense etc.)
• Exchange type B offices for a higher class- at the same cost.
• Prague offers the second cheapest rents among big cities in the CEE region.
• Roughly 230 thousand sq m of new office space has been constructed (with 180 thousand sq m added in 2015).
• 2014: the majority of office space was added in Prague 4 (Pankrác, Budějovická) and in Prague 5 (Stodůlky, Nové Butovice).
• Law firms, financial advisors and investors choose the centre of Prague.

The standard of office buildings is rising and Prague offers the second cheapest rents in the CEE region. The amount of office space will be comparable to the years prior to the financial crisis thanks to new construction finished last year and new construction this year. The vacancy level, which may reach over 17% (the highest historical vacancy in the modern era), is the impetus behind the very advantageous lease conditions , with landlords attracting tenants with very favourable price packages. For the standard price of a B category building, it is now possible to rent space of a higher standard. According to CBRE, the global real estate consultant in this field, there has never been a situation so positively tilted towards companies as this year. Even large and attractive newly-built spaces are within reach. 

The market for office space in Prague is very competitive and landlords are preparing a range of attractive incentive packages for tenants. These include rent holidays or contributing to the fit-out and repair of offices for new tenants, among others. Therefore, CBRE recommends that companies that are not satisfied with their current leasing conditions or their space, start negotiating new terms and conditions, or consider moving. It is possible for tenants to improve their situation and to attain a higher standard than B class buildings under the current market conditions. 

“We haven’t experienced a situation on the market so favourable to the tenant as it is now. Due to the large amount of newly completed office space or space under construction, the trend will last for a few years. We’re observing vacancies in buildings which is at a historical high, and as such we’re experiencing the best conditions for tenants,” says Katarina Wojtusiak, Head of Office Agency at CBRE. 

Prague has more than 3 million sq m of office space on offer, with 150 thousand sq m being completed just last year in 15 different administrative projects, according to the basic statistics of CBRE. Such an amount of office space was last seen in the years prior to the financial crisis, with the amount of completed office space amounting to 80 thousand sq m during the crisis. The least amount of free office space can be seen at Anděl, Chodov and Opatov.  The vacancy rate in Holesovice surpasses 34%, while Prosek and Letňany have vacancy rates of 24%. Rent is stable at between 18,5 – 19,5 per metre a month and can climb even higher in luxurious and interesting projects. The outskirts of Prague offer rental rates between 13 – 14,5 euros per sq m a month. 

180 thousand sq m in 2015 

The construction of interesting administrative projects is continuing in Prague, among them being Enterprise Office Center, Green Line and Delta in Prague 4, Aviatica in Prague 5 and Corso Court in Prague 8. More and more companies are utilizing modern offices in attractive localities as one method of keeping their employees and attracting new ones. Some projects are unique in terms of their architectural conception, as seen in the conceptually interesting and commercially successful projects The Park or City West, for instance.

There is interest on the Czech market for better quality office buildings  of class A , making up around 69% of the total area. They offer a modern environment and equipment – lowered ceilings, split levels, corresponding heating and cooling systems, magnetic swipe cards, adequate parking space and green certification in the best office buildings. Statistical data shows the 75% of all office space to be finished this year are doing so without concluded leasing contracts.