The Prague Research Forum has released the office market figures for Q4 2016. The members of the Prague Research Forum – CBRE, Colliers International, Cushman & Wakefield, JLL and Knight Frank – share non-sensitive information with the aim of providing clients with consistent, accurate and transparent data about the Prague office market.
At the end of Q4 2016, the total modern office stock in Prague stood at 3,208,400 sqm. The share of A Class office space reached 69 percent. Top quality projects, i.e. AAA Class properties, accounted for 17 percent of the total office stock.
In Q4 2016, only one new office project was delivered to the Prague market. South Point, with an office space of 7,500 sqm, is located in the inner city area of Prague 4.
Overall in 2016, a total of 33,400 sqm of offices was completed representing the lowest annual supply ever recorded on the Prague office market. New supply should increase again in 2017 when it is forecasted to reach about 171,000 sqm. There is currently ca. 330,300 sqm of office space under construction in Prague with scheduled completion between 2017 and 2018.
In Q4 2016, two projects commenced construction. These were the ČSOB HQ II (30,000 sqm) in Prague 5 which will be fully occupied by ČSOB and its subsidiaries and AFI Vokovice (12,100 sqm) which is being built speculatively.
Gross take-up (including renegotiations and subleases) in Q4 2016 amounted to 96,800 sqm, representing a decrease of 12.8 percent compared to the previous quarter and a year-on-year decrease of 40.4 percent.
The highest volume of gross take-up was recorded in Prague 5 (30 percent), Prague 4 (28 percent) and Prague 1 (11 percent).
The largest share of gross take-up in Q4 2016 was signed by companies from the IT sector (25 percent), followed by companies from the manufacturing (10 percent) and professional services (10 percent) sectors.
The total share of renegotiations from the gross take-up increased from 20% in Q3 2016 to 29 percent in Q4 2016.
The most significant, non-confidential, transactions of Q4 2016 were – the renegotiation of Seznam.cz (13,400 sqm) in Palác Křižík I and Palác Křižík II in Prague 5, followed by the expansion of MSD (4,500 sqm) in Five in Prague 5, who will occupy ca. 85 percent of the building, and the new occupation of Huawei (2,800 sqm) in Greenline Kačerov in Prague 4.
In Q4 2016, the vacancy rate decreased by 1.1 percentage points, compared to the previous quarter, to 10.6 percent. Total vacant space declined to 338,600 sqm. The highest vacancy rates were recorded in Prague 7 (15.7 percent), Prague 9 (13.9 percent) and Prague 10 (13.4 percent). Conversely, the lowest vacancy rates were recorded in Prague 8 (8.5 percent), Prague 3 (9.1 percent) and Prague 4 (9.3 percent).
In Q4 2016, prime headline rents in the city centre oscillated around €19.50 sqm/month. Prime headline rents in the inner city slightly decreased to €14.50 – 15.50 sqm/month and remained at €13.00 – 14.50 sqm/month in the outer city.