Prague Research Forum Announces the Office Market Figures for Q2 2017

Introduction
The Prague Research Forum is pleased to announce the office market figures for the second quarter of 2017. 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 second quarter of 2017 reached 3,253,000 sq m. The ratio of A-class modern stock to 

B-class modern stock was approximately 70%. Top quality AAA class properties accounted for 18% of the total office stock.

In the second quarter of 2017, a total of 24,700 sq m of office space was delivered, including two new office buildings Five (13,400 sq m) in Prague 5 and Rustonka R1 (11,300 sq m) in Prague 8.

Currently, there is approximately 327,800 sq m of office space under construction in Prague. In the second quarter 2017, one project commenced construction -  Argentinská Buisiness Centre (circa 6 000 sq m) in Prague 7.

This year’s annual supply is forecasted to amount to 155,000 sq m (of which 31,600 sq m has already been completed), while approximately 216,000 sq m of office space should be added to stock in 2018. 

Office Take-up
Gross take-up (including renegotiations and subleases) in the second quarter of 2017 amounted to 153,500 sq m, representing an increase of 45.0% compared to the previous quarter and an increase of 36.9% in year-on-year comparison.

The highest volume of gross take-up was recorded in Prague 4 (36%), Prague 8 (21%) and Prague 7 (10%).

IT companies accounted for the largest share of gross take-up (18.4%) followed by banking sector (15.3%) and manufacturing (13.2%).

The total share of renegotiations in the second quarter accounted for 25% of gross take-up which was 6 percentage points below the first quarter 2017 figure. The share of the total gross take-up attributed to new leases reached 68% in second quarter.

Significant Office Leasing Transactions
The most significant transactions of the second quarter of 2017 were the pre-completion of Moneta Money Bank (21,500 sq m) in BB Centrum A in Prague 4, followed by the renegotiation of KPMG Česká republika (11,044 sq m) in KPMG Office Centre in Prague 8 and the renegotiation of Honeywell (9,989 sq m) in The Park in Prague 4. 

Office Vacancy
In second quarter of 2017, the vacancy rate decreased by 0.8 percentage points to 8.6% compared to the previous quarter. Total vacant space amounted to 278,300 sq m. The highest vacancy rates were recorded in Prague 10 (13.9%), Prague 7 (11.9%) and Prague 3 (11.1%). Conversely, the lowest vacancy rates were recorded in Prague 9 (6.9%), Prague 4 (7.1%) and Prague 2 (7.2%).

Rents 
Prime headline rents in all three submarkets remained stable in second quarter of 2017. Prime headline rents in the city centre remain stable at 20.00 EUR / 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.