Prague Research Forum Announces the Office Market Figures for Q2 2014
The Prague Research Forum is pleased to announce the office market figures for the second quarter of 2014. The members of the Prague Research Forum – CBRE, Colliers International, Cushman & Wakefield, DTZ, JLL – share non-sensitive information with the aim of providing clients with consistent, accurate and transparent data about the Prague office market.
Total modern office stock in Prague exceeded in the second quarter of 2014 2.96 million square meters. A-class properties represent approximately 68% of the modern stock; B-class properties represent the remaining 32%. Top quality AAA class offices reached 381,000 sq m with a share of 13% on total office stock.
In Q2 2014 seven office buildings were completed with a total of 73,300 sq m, this is the highest quarterly supply since Q4 2008. Notable completions include City West C1+C2 (24,100 sq m) in Prague 5, River Gardens II/III (22,100 sq m) and Forum Karlín II (9,500 sq m) both in Prague 8. Around 103,600 sq m of office space is under construction with planned completion in the second half of 2014. Thus a total 180,700 sq m should be completed in Prague this year, the highest level since the record year 2008. Major projects with expected delivery in H2 2014 include BB Centrum Delta (32,500 sq m) in Prague 4, ArtGen (22,900 sq m) in Prague 7 or The Blox (16,300 sq m) in Prague 6.
In the course of Q2 2014 construction was launched on Palác Národní (7,600 sq m) and the refurbishment of the Sweerts-Šporkovský Palác both in Prague 1 (7,000 sq m).
Gross take-up (including renegotiations) in the second quarter amounted to 61,100 sq m, which represents a decrease of 9% compared to the previous quarter and 16% year on year.
The highest volume of gross take-up was recorded in Prague 5 (38%), Prague 8 (28%) and Prague 1 (11%).
Pharmaceutical companies were most actively leasing or renegotiating office space (24 % of gross take-up) followed by professional services (14%) and advertising and media companies (13%).
The total share of renegotiations of gross take-up increased from 28% in Q1 2014 to 43% in Q2 2014.
Significant Office Leasing Transactions
The most significant transactions of the second quarter of 2014 were the pre-completion lease by Merck Sharp & Dohme in Riverview (6,200 sq m) in Prague 5, the renegotiation by JNJ Global Business Services (4,400 sq m) in Factory Office Centre F also in Prague 5, and the renegotiation of Burda Praha (4.300 sq m) in Luxembourg Plaza in Prague 3.
The vacancy rate increased to 14.6% by one percentage point in Q2 2014. Total vacant space amounted to 434,700 sq m. The highest vacancy rates were recorded in Prague 7 (29.3%), Prague 9 (25.3%) and Prague 2 (23.9%). Conversely, the lowest vacancy rates were recorded in Prague 4 (6.3%), Prague 10 (6.6%) and Prague 5 (11%).
Prime headline rents in the city centre continued decreasing in Q2 2014 to 18.50 – 19.50 €/ sq m/ month, while prime rents in the inner city remained stable between 15.00 and 17.50 €/ sq m/ month and in the outer city between 13.00 and 14.50 €/ sq m/ month.