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Prague office market awaits the largest move in its history

Vans moving IT companies and business service centres will cross Prague more than often this year. Firms from this sector (IT and business service centres) were the most active tenants on the Prague market last year, having signed lease contracts for 84,000 sqm and reaching 31 percent of net take-up. Among others there was concluded the largest leasing transaction represented by an agent (JLL) in the history of Prague´s office market – SAP, who leased nearly 25,000 sqm in Metronom office building in Prague 5. SAP will move its 2,000 employees working for three operations under one roof. Significant leases from IT companies on the Prague market included: Avast Software (15,000 sqm in Enterprise Office Center), Microsoft (11,500 sqm in BB Centrum building Delta) and Oracle (10,400 sqm in Waltrovka building Aviatica). As far as IT leasing deals are concerned, this year seems to be promising as well. CSC Computer Sciences leased 9,400 sqm in Enterprise Office Center and further IT companies/business service centres are looking for new space. Prague is – according to the “2015 Tholons 100 Outsourcing Destinations” – one of the best European locations for establishing business service centres.

“According to our experience, companies tend to move after 10 – 12 years on average. After this time they naturally outgrow their current premises, they usually need modern and larger office space. Last year, tenants (not only IT companies) capitalized on the market situation, when developers delivered a lot of new office space to the market. If we were able to find offices in better quality and for similar or reasonably higher rent, we were nearly always given the green light (permission) to go ahead and negotiate a new lease contract. Most of the above mentioned IT companies signed leases in higher quality office buildings,” said Petr Kareš, Head of Tenant Representation at JLL Czech Republic.

“The IT companies mentioned above put a lot of time and effort in their new offices. The relocation was not just a pure move of their current office (usually) closer to the city centre, but they have invested into a higher quality of their offices and the overall layout of the interior. The aim was to meet the expectations of their young employees (generation Y, Millennials) and at the same time use the opportunities that the digital (r)evolution brings to the maximum,” said Kevin Turpin, Head of Research for CEE at JLL: “for example, Microsoft Czech Republic immersed itself for months into workplace strategy preparations and has come up with several truly innovative solutions.”

According to the annual report on the Sector of Shared Service Centres in the Czech Republic in 2016, which was prepared by the Association of Business Leaders Service in cooperation – among others – with JLL, there are currently over 180 business service centres in the Czech Republic. Out of this total, nearly half of the centres (48 percent) are located in Prague, 22 percent in Brno and 21 percent in Ostrava. This sector employed 50,000 people in 2013, two years later 65,000 people (30 percent increase) and there is estimated further grow up to 100,000 people by 2020. There used to be shared or business service centres providing mainly centralized business operations services or outsourcing of financial and accounting services, now they provide a wide scope of business services starting with IT, across HR, marketing, clients services to research and development.

“The requirements put on potential employees of IT companies and business service centres are relatively high. They are expected to have a university degree in a relevant subject (be it programming, accounting, HR etc.), speak foreign languages (fluency in English plus a further language on a professional level) and should be open to further professional education (advanced reporting, business analyses, customer service etc.). On the other hand, there is the new generation Y coming to the labour market which have got different expectations regarding their job or careers (how, when and under what conditions to work). The exhausting workload, which could be for example 10-12 hours for five, six or seven days a week, is not the ideal anymore. Generation Y values interesting and meaningful work which also enables satisfactory social and family life. An innovative working environment combined with flexible working hours help to attract these talents and provide employees with the expected work-life balance. Therefore, companies that comply with this current trend will have the biggest chance both to attract and retain this talent,” concluded Eduard Forejt, Business Development Direct at JLL Czech Republic.

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