Monday, 17 March 2025
“Prague office market finished the year 2024 with record levels of take-up but with minimum new office development planned for the coming years. As a result, the vacancy rate started to drop to the current level reaching 7.3%. Such a number is still considered as healthy; however, large office transactions tend to face difficulties in finding a sufficient number of comparable options for relocations. The limited pipeline of new speculative developments will amplify the imbalance between supply and demand. The office rents have stabilized in the past year but with the limited options for relocations will face further pressure to grow in the coming months. The office market will slowly turn into the Landlord-favourable market,” Comments Jana Vlková, Head of Office Agency & Workplace Advisory, Czech Republic, Colliers.
At the close of the fourth quarter of 2024, the total office stock in Prague expanded to 3.96 million square meters, with the completion of just one project—the refurbishment of 100 Yards in Prague 1, adding 3,300 square meters of modern office space. Throughout the year, Prague saw 72,800 square meters of new office supply across eight completed projects, aligning with market expectations. However, projections for 2025 indicate a significant slowdown, with only 24,600 square meters of new supply expected.
For the second consecutive quarter, no new office construction or refurbishment projects were initiated, underscoring a cautious market sentiment. As of the end of Q4 2024, the total volume of office space under construction stood at 164,300 square meters, with a significant portion already pre-leased. The Smíchov City project in Prague 5 accounts for the largest share of the ongoing developments.
The composition of Prague’s office stock remains dominated by Class A buildings, which constitute 74% of the total market, while AAA-rated spaces represent 21%.
Office Leasing Activity
Leasing activity in Q4 2024 was robust, with total gross take-up reaching 185,100 square meters, reflecting an 11% increase year-on-year and a 39% jump compared to Q3 2024. New leases and expansions accounted for 38% of the take-up, while pre-leases contributed 12%. Renegotiations made up the largest share at 48%, with subleases comprising the remaining 2%.
Among the most active districts, Prague 4 recorded the highest demand, accounting for 30% of gross take-up, followed by Prague 1 (16%) and Prague 8 (15%). In terms of industry activity, technology firms led the demand with 18% of total leasing activity, followed closely by the financial and energy sectors, each contributing 14%.
Looking at the broader picture for 2024, total gross take-up reached 636,700 square meters, surpassing 2022 levels by 18% and exceeding the previous year’s total by 21%. New leases and expansions accounted for 33% of annual take-up, pre-leases for 16%, and subleases for 2%, with renegotiations comprising 49%.
Prague 4 and Prague 5 emerged as the most active office districts in 2024, each accounting for 25% of total leasing activity, followed by Prague 8 with 17%. Financial firms dominated demand, representing 25% of the total annual take-up, with technology firms contributing 18% and professional services firms 8%.
Office Vacancy and Absorption
The Prague office market demonstrated strong absorption levels in Q4 2024, with a positive net absorption of 31,100 square meters, indicating a significant increase in office occupancy. The overall vacancy rate decreased to 7.3%, down 66 basis points from the previous quarter but reflecting a 24 basis point increase year-on-year.
The total volume of vacant modern office space in Prague dropped to 290,700 square meters. The lowest vacancy rates were observed in Prague 2 (2.6%) and Prague 8 (3.6%), while the highest vacancies were recorded in Prague 3 (19.0%) and Prague 10 (12.0%).
Office Rents
Prime office rents in Prague saw a marginal increase during Q4 2024. In the city center, prime rents ranged between €28.50 and €29.50 per square meter per month. In the inner city districts, rents remained stable between €18.50 and €19.50, while in outer city locations, they ranged from €15.50 to €16.50 per square meter per month.
Despite the modest increase in prime rents, asking rents across Prague’s established office hubs have continued to rise. This trend is driven by several factors, including sustained demand, rising construction costs, and a limited supply of high-quality office space, leading to increased competition in sought-after locations.
As Prague enters 2025, market dynamics are expected to be shaped by the interplay of economic conditions, construction cost pressures, and evolving tenant preferences. The slowdown in new supply may create opportunities for landlords to leverage rising demand, while tenants may face a more competitive leasing environment.
Source: Prague Research Forum
