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Office markets in the regions remain underdeveloped

With a few exceptions, the regional capitals have limited modern office stock

Kancelářské trhy v regionech zůstávají nedostatečně rozvinuté 

Jones Lang LaSalle’s latest report “Czech Republic Office Market Overview” was launched today. The report examines the office market in the country’s regional capitals and provides a general overview on rental levels in these cities.

According to the report, there is a lack of modern office premises available for commercial leasing in a number of the 14 Czech regions. As a result, asking rents in lower quality premises are reaching similar levels to prime rents found in more developed markets such as Brno, Ostrava and Pilsen. Although there are projects in the planning process in most of the regions and their completion would improve the situation, the global economic downturn put almost all new construction on hold.  In general, the smaller regional markets are awaiting a revival in the larger cities, where the current vacancy level or choice is in favour of tenants. This situation affects the leasing conditions around the country, where the situation in many regions is quite the opposite and the markets are dominated by landlords. The current state of the market is likely to continue until the economic situation improves throughout 2010 and into 2011.

Ondřej Vlk, Head of Research for the Czech Republic and Slovakia says: “The state of the office market in the country’s regional capitals is not so closely linked with the regions’ economic situation as could be expected. While the capitals of the regions with higher unemployment and lower GDP, such as Ústí nad Labem, have a relatively small but growing modern office market, some of the regions which are better off, are facing the problem of an undersupply of modern offices. Owners and landlords of old office projects can then afford to demand rent that is similar to rent in modern office buildings in other more developed cities or regions, as the local tenants have no comparison and see no benefit in seeking more efficient modern office space.”

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