The IT sector and professional services are raising demand for office space in Prague over the long term
A study by CBRE that analyses the demand for office space by business sector suggests that the greatest interest in Prague office space is dominated by companies operating in the IT sector, whose headquarters can be found throughout the city. Companies working in the financial sector prefer Butovice, Pankrác and Budějovická, while pharmaceutical companies dominate in Anděl and legal services are based in the centre of Prague.
Prague is experiencing ever-increasing demand for office space, both by companies newly entering the market and companies that have decided to change their location because of favourable market conditions. The greatest demand has been for modern category A office buildings in recent years, whereas cost considerations were the primary driver when selecting office space in the past. Currently, however, due to strong competition, the prices of offices are fluctuating at relatively the same level. For example, monthly rent for offices in the centre of Prague is about 19 EUR/sq m, while in areas such as Karlín, Pankrác or Anděl the price of monthly rent ranges from 14 to 15 EUR/sq m and in the periphery it ranges from 12 to 14 EUR/sq m.
Due to the emergence of new quality office buildings outside the centre and the excess of supply when compared to demand, the price difference between the outer and the inner city is not so markedly different.
There are exceptions, however, for example The Chodov Park, where prices are holding at inner city locations, without affecting the demand for office space in this building.
Currently, good access to the site and the property itself play an important role in choosing office space, as well as the quality and range of complementary services and lease terms, and also the preferences of companies operating in the same industry. The survey confirms the trend that companies operating in the financial sector generally prefer offices in New Butovice, Pankrác and Budějovická, while lawyers and professional service providers opt for luxurious office address in Prague. Anděl is still an attractive destination in the real estate market, which is currently dominated by mostly pharmaceutical companies (see chart). However, acquiring office space in this locality is limited by the fact that there has not been a new development project recently.
Net demand for office space in different localities in Prague
More and more companies are realizing the impact that working environment plays on the satisfaction, motivation and performance of their employees. Companies already choose offices where employees will be satisfied and happy to spend their time.
Attractive and easily accessible work space has become an instrument of personnel policy and a benefit that reduces turnover of existing staff and lends itself to attracting new professionals and talent.
Many employees these days do not choose their job by the salary, but also take into account the location of the office, whether restaurants or relaxation zones are available and whether the site makes it easier to combine personal life with work.
CBRE Group, a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2016 revenue). The Company has approximately 75,000 employees and serves real estate investors and occupiers through approximately 450 offices worldwide (excluding affiliates). CBRE offers a broad range of integrated services including project management; property management; investment management; valuation; property leasing; strategic consulting and research and consulting. In the Czech Republic, CBRE has almost 350 employees and manages nearly 70 commercial premises with a total area nearly 1.2 mil. sq. m. Read more at www.cbre.cz.