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Cost reduction and a better standard of services are the driving factors for the relocations of companies’on the Czech market

What makes companies change their seats? What are the reasons companies leave their present office spaces? What are the most sought-after locations? What role in the decision-making process does improving standards and services play? CBRE, a global consulting company operating in the real estate sector, has investigated the interest in office space relocation.

CBRE Study: What are the most frequent reasons for companies to relocate?  

• Reduction in rents and operating costs; increased comfort and services. 
• Need to consolidate several locations; expansion.
• Companies move to “good addresses” where other companies operating from the same industry are thriving.
• Switching from “open space” to “activity-based working environment”.
• IT companies prefer Prague 4 (Pankrác, Budějovická), Prague 8 (Karlín) and Chodov.
• Banks are especially concentrated in the area of Prague 4 and Prague 5.
• Consulting companies are seated in particular in the centre of Prague; pharmaceutical companies prefer Prague 8 and Prague 5 - Anděl and Smíchov.
• In the last five years, 38% of all contracts concluded in the banking sector were signed in Pankrác - Budějovická.

Initially companies consider relocating to reduce rents and operating costs. New office spaces are more space-effective and less expensive to operate and this is the reason why even relatively small companies can witness considerable reductions in costs from relocating. Landlords are more willing for substancial fit out contributions to find new tenants. This is a good motivating factor for tenants who can see the benefits of relocating compared to renegotiating leasing terms and conditions in the present office spaces. 

“Currently, one of the main reasons for relocating on the part of companies is better leasing conditions and a better standard of services. Many companies combine this issue with the need to consolidate their premises from several locations into one,” says Katarina Wojtusiak, Head of Office Agency, CBRE explaining that this applies to larger demands where companies are seeking office space of several thousands sq. m. Another important factor for moving is that an increasing number of companies have leased the same office space for 10 or more years and would simply like to improve the standard and fit-out of their offices, services and availability. 

Newly built administrative buildings offer a more productive working environment, more cost-effective operation and more advanced technology compared to older buildings with similar lease conditions. “Recently, we have seen a significant trend where large global companies are leaving the traditional concept of office space (open space / separated offices) and leaning towards offices which are designed according to the so-called “activity-based working environment”. The administrative building where the companies are seated currently, prevent a change in the office space concept for technical reasons and therefore the companies tend to look for a brand new environment,” says Lukáš Radouš, Senior Project Manager Building Consultancy Department, CBRE explaining the situation on the market. 

IT in Chodov, the banking sector in Pankrác and consulting services in the city centre 

Nearly 38% of all contracts signed in the last five years in the banking sector were signed in the Pankrác - Budějovická location. 20% of all contracts signed in the consulting services sector in the same period were signed in the city centre and the IT sector keeps preferring the Pankrác - Budějovická and Chodov locations. 25% of contracts for IT companies in the last five years were signed in Pankrác and Budějovická and 21% of contracts were concluded in Chodov. Pharmaceutical companies are concentrated in particular in Prague 8 and Prague 5 Anděl.

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About CBRE

CBRE Group, a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees and serves real estate owners, investors and occupiers through approximately 350 offices in more than 60 countries (excluding affiliates) worldwide. CBRE offers strategic advice and execution for real estate sale and lease, corporate services, facility and project management, real estate appraisal, development services, investment management and research. In the Czech Republic CBRE has nearly 350 employees. In the Czech Republic CBRE manages nearly 200 items of commercial premises with a total area nearly 1.2 mill. sq. m. Read more at www.cbre.cz