Prague Research Forum Announces the Office Market Figures for Q2 2016
Total modern office stock in Prague in the second quarter of 2016 reached 3,224,800 sq m. The ratio of A-class modern stock to B-class modern stock was approximately 70%. Top quality AAA class properties accounted for 15% of the total office stock.
In Q2 2016, a total of 12,000 sq m of new office space was delivered, including two buildings: Classic 7 Phase III (5,600 sq m) in Prague 7 and Kotelna Park (6,500 sq m) in Prague 5. Currently, there is approximately 196,200 sq m of office space under construction in Prague. In Q2 2016, Mechanica (26,400 sq m) and the refurbishment of M1 – Walter (4,900 sq m) situated in Prague 5 commenced constructions. Furthermore, Aspira Business Centre (16,400 sq m) also in Prague 5, commenced construction works. This year´s annual supply is forecast to amount to just 32,400 sq m, while approximately 175,800 sq m of office space should be added to stock in 2017.
Gross take-up (including renegotiations and subleases) in the second quarter of 2016 amounted to 112,600 sq m, representing an increase of 22% compared to the previous quarter but a decrease of 9% in year-on-year comparison.
The highest volume of gross take-up was recorded in Prague 5 (30%), Prague 4 (22%) and Prague 1 (16%).
IT companies accounted for the largest share of gross take-up (17.8%) followed by financial sector (17.6%) and manufacturing (10.5%).
The total share of renegotiations in the second quarter accounted for 27% of gross take-up which was 3 percentage points below the Q1 2016 figure. The share of the total gross take-up attributed to new leases reached 53% in Q2.
Significant Office Leasing Transactions
The most significant transactions of the second quarter of 2016 were – a new lease to CSC Computer Sciences (9,400 sq m) in Enterprise Office Center in Prague 4, followed by the renegotiation of NN životní pojišťovna a penzijní společnost (8,300 sq m) in Zlatý Anděl in Prague 5 and the pre-lease of Livesport in Aspira Business Centre (5,900 sq m) in Prague 5, which is currently under construction.
In Q2 2016, the vacancy rate decreased by 1.6 percentage points to 12.3% compared to the previous quarter. Total vacant space amounted to 397,700 sq m. The highest vacancy rates were recorded in Prague 7 (20.5%), Prague 10 (17.9%) and Prague 1 (14.6%). Conversely, the lowest vacancy rates were recorded in Prague 5 (7.5%), Prague 8 (10.5%) and Prague 4 (11.4%).
Prime headline rents in all three submarkets remained stable in Q2 2016. Prime headline rents in the city center varied between 18.50 and 19.50 €/ sq m/ month. Prime headline rents in the inner city varied between 14.50 and 16.00 €/ sq m/ month and in the outer city between 13.00 and 14.50 €/ sq m/ month.