Prague Research Forum Announces the Office Market Figures for Q4 2016

Introduction
The Prague Research Forum is pleased to announce the office market figures for Q4 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
At the end of Q4 2016, the total modern office stock in Prague stood at 3,208,400 sq m. The share of A class office space reached 69%. Top quality projects, i.e. AAA class properties, accounted for 17% 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 sq m, is located in the inner city area of Prague 4. 
Overall in 2016, a total of 33,400 sq m 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 approximately 171,000 sq m. There is currently ca. 330,300 sq m 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 sq m) in Prague 5 which will be fully occupied by ČSOB and its subsidiaries and AFI Vokovice (12,100 sq m) which is being built speculatively. 
Office Take-up

Gross take-up (including renegotiations and subleases) in Q4 2016 amounted to 98,300 sq m, representing a decrease of 11.5% compared to the previous quarter and a year-on-year decrease of 39.5%. 

The highest volume of gross take-up was recorded in Prague 5 (29%), Prague 4 (27%) and Prague 8 (11%).

The largest share of gross take-up in Q4 2016 was signed by companies from the IT sector (24%), followed by companies from the manufacturing (10%) and professional services (9%) sectors. 

The total share of renegotiations from the gross take-up increased from 20% in Q3 2016 to 30% in Q4 2016.

Significant Office Leasing Transactions
The most significant, non-confidential, transactions of Q4 2016 were - the renegotiation of Seznam.cz (13,400 sq m) in Palác Křižík I and Palác Křižík II in Prague 5, followed by the expansion of MSD (4,500 sq m) in Five in Prague 5, who will occupy ca. 85% of the building, and the new occupation of Huawei (2,800 sq m) in Greenline Kačerov in Prague 4.

Office Vacancy
In Q4 2016, the vacancy rate decreased by 1.1 percentage points, compared to the previous quarter, to 10.6%. Total vacant space declined to 338,600 sq m. The highest vacancy rates were recorded in Prague 7 (15.7%), Prague 9 (13.9%) and Prague 10 (13.4%). Conversely, the lowest vacancy rates were recorded in Prague 8 (8.5%), Prague 3 (9.1%) and Prague 4 (9.3%).

Rents  
In Q4 2016, prime headline rents in the city centre oscillated around 19.50 €/ sq m/ month. Prime headline rents in the inner city slightly decreased to 14.50 - 15.50 €/ sq m/ month and remained at 13.00 - 14.50 €/ sq m/ month in the outer city.