Prague Research Forum Announces the Office Market Figures for Q3 2016

Introduction
The Prague Research Forum is pleased to announce the office market figures for the third quarter of 2016. The members of the Prague Research Forum – CBRE, Colliers International, Cushman & Wakefield, JLL, Knight Frank – share non-sensitive information with the aim of providing clients with consistent, accurate and transparent data about the Prague office market. 

The RICS supports activities of the Prague Research Forum.
 
Office Supply/Stock
Total modern office stock in Prague in the third quarter of 2016 reached 3,233,800 sq m. The ratio of A-class modern stock to 
B-class modern stock was approximately 71%. Top quality AAA class properties accounted for 17% of the total office stock. 

In Q3 2016, a total of 13,900 sq m of office space was delivered, including one new office building Futurama Business Park F (10,200 sq m) in Prague 8 and two refurbished buildings Harrachovský palác (1,400 sq m) in Prague 1 and Antal Business Centre (2,400 sq m) in Prague 4. 
Currently, there is approximately 247,300 sq m of office space under construction in Prague. In Q3 2016, three projects commenced construction, Dynamica (13,400 sq m) in Prague 5, three buildings of Palmovka Open Park (21,600 sq m) in Prague 8 and Visionary (22,000 sq m) in Prague 7.
This year´s annual supply is forecasted to amount to just 33,400 sq m (of which 25,900 sq m has already been completed), while approximately 178,800 sq m of office space should be added to stock in 2017. 
Office Take-up

Gross take-up (including renegotiations and subleases) in the third quarter of 2016 amounted to 109,600 sq m, representing a slight decrease of 3.3% compared to the previous quarter but an increase of 20.1% in year-on-year comparison. 

The highest volume of gross take-up was recorded in Prague 5 (34%), Prague 4 (17%) and Prague 8 (14%).

Pharmaceutical companies accounted for the largest share of gross take-up (26%) followed by IT sector (14%) and finance (8%).

The total share of renegotiations in the third quarter accounted for 20% of gross take-up which was 6 percentage points below the Q2 2016 figure. The share of the total gross take-up attributed to new leases reached 70% in Q3.

Significant Office Leasing Transactions
The most significant transactions of the third quarter of 2016 were the pre-completion of Johnson & Johnson (15,100 sq m) in Mechanica 01, followed by the pre-completion of MSD (6,700 sq m) in Five and the renegotiation of Škofin (6,400 sq m) in Aragonit, all in Prague 5. 


Office Vacancy
In Q3 2016, the vacancy rate decreased by 0.6 percentage points to 11.7% compared to the previous quarter. Total vacant space amounted to 378,500 sq m. The highest vacancy rates were recorded in Prague 7 (17.9%), Prague 9 (15.3%) and Prague 10 (14.8%). Conversely, the lowest vacancy rates were recorded in Prague 5 (7.4%), Prague 3 (8.3%) and Prague 8 (10.0%). 


Rents  
Prime headline rents in all three submarkets remained stable in Q3 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.