Prague’s office market faces supply shortage amid record demand

The demand for office space in Prague reached an unprecedented level in 2024, with companies seeking a total of 637,000 square meters. However, only 24,600 square meters of new office space is expected to be delivered in 2025, exacerbating the existing supply shortage. Analysis by Savills indicates that office development in Prague has been in steady decline since 2021, with just 72,800 square meters of office space completed in 2024. This ongoing reduction in supply has created a significant imbalance in the market.

Before 2020, annual office development in Prague averaged 150,000 square meters, but has since declined by more than 50%. Currently, around 164,000 square meters of office space is under construction across the city, but much of this has already been secured. Approximately 60% of the new space is pre-leased, with an additional 25% reserved, leaving less than 15% available for new tenants. The most pronounced shortages are in prime locations, including Prague’s city center and Karlín, where modern office occupancy rates exceed 95%, according to Pavel Novák, Head of Office Agency at Savills.

Larger office projects are not expected to enter the Prague market before 2027 to 2029. Novák notes that while several projects are in advanced planning stages, no substantial increase in supply is anticipated over the next two to three years. Companies planning future expansions have the opportunity to assess these upcoming projects now, securing key details and gaining early access to available spaces. Additionally, extensive experience among local developers, architects, and construction firms will likely contribute to the quality of these new office developments.

One of the primary reasons for the decline in new office construction is the lengthy and complex permitting process in the Czech Republic. In some cases, project approvals can take ten years or longer, during which time costs continue to rise. Increased expenses for labor, materials, and energy further contribute to higher development costs. Although interest rates have declined, they remain elevated compared to previous levels, adding to financial pressures. These cost increases translate into higher rental prices, which must align with market expectations to ensure project viability. Prague’s competitiveness is also affected by faster approval processes in neighboring Central European countries such as Poland.

The persistent demand for premium office space in the city center, combined with construction cost increases, has led to further rental price growth. By the end of 2024, headline rents for modern office spaces in central Prague ranged from €28.50 to €29.50 per square meter per month, reflecting a 7% year-on-year increase. In other districts of Prague, headline rents have risen by an average of 4% over the past year, reaching €18.50 to €19.50 per square meter per month.

The market is also experiencing the effects of deferred demand, where companies unable to secure office spaces with required specifications choose to extend their existing leases instead. This delay in decision-making could lead to additional market pressure once new office spaces become available, further shaping the office sector in the coming years, according to Novák. The Prague office market is now at a critical juncture, with demand continuing to outstrip supply and development constraints limiting future expansion.

Source: Savills Czech Republic

Future Mind Study: Generative AI usage and public perception in Poland

A recent study by Future Mind reveals that generative artificial intelligence (GenAI) is increasingly becoming part of everyday life in Poland. According to the report titled How Does AI Change the Everyday Life of Poles? Artificial Intelligence in Work and Personal Life, 7% of Poles use GenAI daily, while 17% interact with such tools at least once a week. Every fourth respondent reported using GenAI at least once a month or less.

The study highlights that GenAI applications extend beyond the professional sphere, assisting individuals in developing personal interests, managing daily responsibilities, and organizing leisure activities. Respondents envision AI playing an even greater role in the future, with 44% believing it will aid in knowledge expansion and skill development, 30% anticipating its role as a personal assistant, and 14% seeing AI as a potential co-worker. Additionally, 12% of respondents suggested that AI could take on the role of a therapist, reflecting a growing acceptance of its application in mental well-being support.

Jakub Nawrocki, lead UX researcher at Future Mind, noted that generative AI has established a strong presence in the lives of younger users, particularly those aged 20 to 34. Among this demographic, 55% reported using GenAI to some extent, ranging from daily to sporadic interactions. The percentage decreases with age, with 45% usage among respondents aged 35 to 49 and 37% among those aged 50 to 65. This trend indicates that familiarity with innovative technologies significantly influences adoption rates across different age groups.

Despite the benefits associated with GenAI, concerns remain regarding its potential risks. Privacy violations were identified as the most significant concern by 44% of respondents. Additionally, 43% pointed to the risks of disinformation and manipulation, 37% expressed fears about the development of advanced weaponry, and 34% cited surveillance by AI algorithms as a major issue. Beyond these global-scale concerns, respondents also highlighted potential societal consequences, such as the dehumanization of interpersonal relationships (35%) and the reduction of critical thinking skills (25%). Nawrocki emphasized that while AI presents vast innovative potential, careful regulation is essential. According to the study, 50% of participants support stricter legal standards for AI development and implementation.

The introduction of the Artificial Intelligence Act, which came into force on 1 August 2024, represents the world’s first regulatory framework specifically addressing AI governance. The legislation is based on a risk assessment approach, requiring compliance measures proportional to the level of potential threats posed to citizens, societies, and economies. However, debates surrounding AI regulation persist, particularly regarding the extent of governmental oversight. The study found that 48% of respondents believe AI should be more strictly regulated by public institutions such as national governments or the European Union, while 28% consider the current regulatory framework sufficient. In contrast, 10% of respondents believe that AI should be subject to fewer legal restrictions. This division of opinion underscores the necessity for a balanced approach to regulation that aligns with both public concerns and technological progress.

The study was conducted by SW Research on behalf of Future Mind using computer-assisted web interviewing (CAWI). The data was collected from an online panel between 25 October and 5 November 2024, with a sample size of 1,020 respondents. These findings provide valuable insights into how AI is reshaping daily life in Poland while highlighting the ongoing discourse on its ethical, societal, and regulatory implications.

Source: Future Mind and ISBnews

MLP Group expects stable leasing in 2025 with improved margins

MLP Group anticipates leasing a similar amount of warehouse space in 2025 as in the record-breaking year of 2024, when tenant demand reached approximately 305,000 m², according to company president Radosław T. Krochta. However, he emphasized that this year’s contract structure will focus more on higher-margin leases in the German and Austrian markets.

“Our excellent results last year were driven by our strategy of concentrating on major cities where demand is strongest and favorable market conditions. We are well-positioned to secure contracts in 2025 and 2026, and long-term demand remains promising,” said Krochta.

He added that while leasing volumes are expected to remain stable this year, a larger share will come from Germany and Austria, leading to higher-margin contracts that will positively impact 2025 financial results.

On 19 February, MLP Group announced that it had leased a total of 305,000 m² of space in 2024, with 225,000 m² from new lease agreements—an 82% increase compared to the previous year. During this period, the company gained 22 new clients, while 20% of total demand came from existing tenants.

“We are very comfortable with our goals, particularly given how we ended last year,” Krochta noted, reaffirming confidence in the company’s strategic direction.

On 24 February, MLP Group announced a new lease agreement with JD.com, one of the largest players in global e-commerce. Through its subsidiary, JD Logistics, the company has leased 9,600 m² of modern warehouse and office space at MLP Pruszków II, customized to its operational needs. The facility is set to become operational in March 2025, with full readiness expected by June.

“We continue to see strong growth potential in Pruszków. Our park is strategically located on the route between Warsaw and the planned Central Transport Hub (CPK). We believe this corridor will be crucial for future development, and many tenants recognize that the CPK will materialize sooner or later,” Krochta explained.

MLP Group is a developer, owner, and manager of logistics and industrial parks as well as business parks for light industrial production. It operates in Poland, Germany, Austria, and Romania. The company has been listed on the Warsaw Stock Exchange (WSE) since 2013 and is part of the sWIG80 index. In 2023, MLP Group reported consolidated revenues of PLN 360.8 million.

Source: ISBnews

Business bankruptcies decline while registrations rise in EU

In the fourth quarter of 2024, the number of bankruptcy declarations among businesses in the European Union fell by 0.7% compared to the previous quarter. At the same time, business registrations increased by 2.6%, reflecting overall economic resilience and growth across all sectors.

Data indicate that business registrations rose in every sector of the economy compared to the third quarter. The most significant increases were seen in transportation and storage, which grew by 5.7%, followed by industry at 3.5%, and the information and communication sector at 2.3%. The construction sector recorded the smallest rise, with a 0.9% increase in registrations.

While bankruptcies declined in most sectors, certain industries experienced notable increases. The education and social activities sector saw a significant 17.7% rise in bankruptcy declarations, while industry recorded a smaller increase of 1.6%. Conversely, the steepest declines in bankruptcies were observed in the information and communication sector, which dropped by 25.6%, accommodation and food services, which fell by 12.2%, and transportation and storage, which saw a 10.1% decrease.

These trends highlight shifting dynamics in the EU business landscape, with growth in new business formations and a decline in insolvencies across most industries, despite challenges in specific sectors.

Source: eurostat

Metropolitan Warsaw secures green energy contract, delivering cost savings and CO₂ reductions

Metropolitan Warsaw has signed a Power Purchase Agreement (PPA) that will lower energy costs and reduce CO₂ emissions over the next three years. The agreement, one of the first of its kind in Poland’s property market, ensures the supply of green energy from traceable renewable sources, benefiting both tenants and the environment.

Through this agreement with green energy trading expert Ekovoltis, part of the energy supplied to Metropolitan Warsaw will come from photovoltaic panels, while the remainder will be sourced from Poland’s renewable energy market. Over the contract’s duration, nearly 20 gigawatt hours (GWh) of electricity will be provided under certified, traceable conditions. The photovoltaic panels supplying the energy are located within Poland, supporting the local renewable energy sector.

Optimizing electricity purchases through the PPA will reduce total energy costs for tenants by nearly PLN 2 million over three years, representing an estimated 15% reduction in energy expenses compared to projected market prices. These financial savings, combined with a commitment to renewable energy, strengthen tenants’ ESG compliance and sustainability efforts. By occupying spaces powered by green energy, tenants can enhance their environmental credentials, meet sustainability targets, and build stakeholder trust.

The agreement will also lead to a reduction in CO₂ emissions by approximately 11,200 tonnes over the contract period. This impact is comparable to removing 2,240 cars from the roads annually or supplying power to 1,120 households for three years.

“A PPA is a relatively new approach in Poland, and Metropolitan Warsaw is among the first office buildings to implement it for tenants. This contract brings direct financial advantages through effective cost management while also supporting sustainability by lowering emissions through renewable energy,” said Joanna Kowalska-Szymczak, founder and CEO of EBRU Capital, the asset manager of Metropolitan Warsaw.

A Power Purchase Agreement (PPA) is a long-term contract between an energy producer and a buyer, ensuring price stability and a direct energy source. It helps secure investments, minimize price risks, and provide long-term value to properties adopting this approach.

The tender process for energy supplies under the PPA, as well as contract negotiations, were overseen by Westbridge Poland, a leading advisor in energy and sustainability for the real estate industry. Hajo Engelke, Managing Director of Westbridge Poland, emphasized that the agreement is a significant step toward a more sustainable energy supply in Poland’s real estate sector. “This contract demonstrates how environmental responsibility and economic benefits can be effectively combined, delivering advantages to both tenants and the wider environment,” he said.

Metropolitan Warsaw is a premium office and commercial complex located at Plac Marszałka Józefa Piłsudskiego, adjacent to Saski Garden and the Royal Route. The building offers 33,722 sqm of high-quality office space and 3,300 sqm of commercial and service areas with direct street access. The three interconnected seven-story blocks also house exclusive boutiques, a fitness club, and other premium amenities.

The property features 441 underground parking spaces, including public parking and charging stations for electric vehicles. Infrastructure for cyclists is also available. Metropolitan Warsaw has received multiple sustainability and safety certifications, including a BREEAM Excellent rating, a WELL Health-Safety Rating, and a WiredScore Platinum certification for digital connectivity and emergency planning.

With its commitment to energy efficiency, tenant well-being, and sustainability, Metropolitan Warsaw continues to set an example in Poland’s real estate market.

Supersam in Katowice undergoes transformation with new gastronomic zone

Supersam, a well-known mixed-use facility in Katowice, is set to introduce a new gastronomic zone as part of its ongoing redevelopment. The owner and manager, Globalworth, has initiated demolition and preparatory work for the project, which is scheduled to open in December 2025. The new culinary area will occupy nearly 1,000 square meters on the ground floor and will include a seasonal outdoor garden.

The introduction of a dedicated food space marks a new phase in Supersam’s development, aligning with a strategy outlined two years ago. The modernization process has involved the consolidation of commercial space, with the expiration of three lease agreements in early February 2025 allowing for a 900-square-meter area to be repurposed. Dismantling work is already underway, with fit-out construction expected to begin in April 2025 before the handover to tenants in autumn.

According to Artur Apostoł, Managing Director of Real Estate Operations at Globalworth in Poland, the addition of a gastronomic component is expected to enhance Supersam’s appeal to urban customers. The project follows Globalworth’s experience in multifunctional spaces, including Hala Koszyki in Warsaw and Wrocław’s Renoma, both of which incorporate food-oriented concepts.

Supersam has held a strong position in the Katowice retail market, but the demand for a comprehensive dining experience has been growing among both visitors and prospective tenants. Barbara Wójcik, Asset Management & Retail Leasing Director at Globalworth, stated that the company’s previous experience in developing food-focused areas, such as Basketroom and the PeDeT food & chill zone in Wrocław, has provided insights into designing a functional and attractive gastronomic space. She emphasized that the new zone aims to cater to office workers, fitness center users, and the wider local community, with the potential to become a standalone culinary destination in Katowice.

The project will introduce nine dining spaces with a shared seating area, offering a mix of international cuisine and local eateries. The design concept will feature warm tones, natural materials, and ample greenery, creating distinct seating areas. Additionally, a seasonal outdoor garden will provide an open-air dining option on the north side of the building.

The entire renovation process is expected to take 10 months, with the official opening of the gastronomic zone planned for December 2025.

Hauck & Aufhäuser Fund Services reshuffles leadership amid growth drive

Hauck & Aufhäuser Fund Services S.A. (“HAFS”), a leading provider of integrated services for institutional investors and asset managers, has announced a significant reshuffling of its management board. Christoph Kraiker, a board member since 2019, has been appointed as the new Chief Executive Officer (CEO), effective immediately. He will be supported by Lisa Backes, who remains a member of the management board.

Simultaneously, Hauck & Aufhäuser Administration Services S.A. (“HAAS”), a fully-owned HAFS subsidiary specializing in fund administration, has named Christian Mader as its new CEO. Mader, previously a member of the HAAS management board, will be joined by Ingo Gozemba, who takes on the role of deputy.

Michael Bentlage, CEO of Hauck Aufhäuser Lampe Privatbank AG, praised the new appointments: “With Christoph Kraiker and Christian Mader at the helm of our fund services entities, we are placing experienced leaders with deep industry knowledge in charge. Their strategic foresight and proven expertise will strengthen our market position and accelerate our growth trajectory.”

These leadership changes reflect the company’s commitment to enhancing growth, digitization, efficiency, and internationalization within its fund services division.

HAFS, one of Europe’s major third-party Alternative Investment Fund Managers (AIFMs), oversees more than €110 billion in assets. Its 350 specialists manage fund administration and investment services across a range of asset classes, including real estate, infrastructure, private debt, and private equity. With over 25 years in asset servicing, the company operates from offices in Luxembourg, Germany, and Ireland.

Expressing his enthusiasm for the role, Kraiker stated: “I am honored by the trust placed in me and excited to guide Hauck & Aufhäuser Fund Services towards a prosperous future. Our focus remains on delivering bespoke solutions and strengthening our market presence with the expertise of our exceptional team.”

With more than two decades in the investment fund business, Kraiker has held senior positions in fund services and client advisory before joining HAFS.

Mader echoed similar sentiments: “Taking on the CEO role at HAAS is a privilege. In an evolving financial landscape, agility and innovation are crucial. I look forward to leading the company through its next phase of growth while maintaining our commitment to top-tier service.”

Bringing extensive financial sector experience, Mader previously worked in strategic consultancy, advising financial institutions and asset managers on regulatory compliance, process optimization, and strategic development.

The restructuring underscores Hauck & Aufhäuser’s continued drive to expand and refine its fund services, reinforcing its position as a key player in European asset management.

White & Case signs long-term lease at CENTRAL PARX in Frankfurt

ABG Real Estate Group and HanseMerkur Grundvermögen have secured a major leasing success for their CENTRAL PARX development in Frankfurt am Main. International law firm White & Case has signed a long-term lease as an anchor tenant, occupying all office spaces within the STUDIO and PAVILLON buildings, totaling at least 11,670 square meters. The firm also holds additional options for the remaining spaces in the TOWER. The 15-year lease agreement includes modern office spaces, 100 car parking spots, and 100 bicycle spaces.

This lease marks a significant milestone in the repositioning of CENTRAL PARX. With over 85% of the project pre-let at the start of construction, ABG Real Estate Group has opted to forgo its initial plan to self-occupy the PAVILLON. White & Case, a globally recognized law firm, is currently based nearby on Bockenheimer Landstraße, a location originally developed by ABG Real Estate Group.

CENTRAL PARX, an iconic three-part building complex situated at Bockenheimer Landstraße 10, comprises the TOWER, STUDIO, and PAVILLON, offering a total rental area of approximately 25,650 square meters. The extensive refurbishment of this historically listed property is already underway. Deconstruction and gutting work commenced at the end of 2024, with vertical construction set to begin in late summer 2025. Completion is scheduled for early 2028.

Ulrich Höller, Managing Partner at ABG Real Estate Group, highlighted the significance of this agreement: “Securing White & Case as a top-tier tenant and achieving such a high pre-letting rate at the start of construction underscores the exceptional quality of the CENTRAL PARX project. It sets a new benchmark for modern and sustainable workplaces in one of Frankfurt’s most prestigious locations.”

Malte Andes, Deputy CEO of HanseMerkur Grundvermögen, echoed this sentiment: “This lease agreement with one of the world’s largest law firms affirms the sustained demand for premium office properties in prime urban locations. The superior quality and strategic location of CENTRAL PARX make it highly attractive to leading international tenants.”

Karsten Wöckener, Head of Germany and Partner in the Global Capital Markets Practice at White & Case, expressed enthusiasm about the move: “We are delighted to have found a sustainable, future-ready location in Frankfurt with CENTRAL PARX’s PAVILLON and STUDIO. This historically significant complex, located in a prime area, aligns perfectly with our firm’s values and legacy. As we celebrate the 25th anniversary of our merger with the global White & Case, this move reflects our commitment to providing a modern and dynamic workspace that fosters collaboration and growth.”

CBRE and Hauck Schuchardt advised on the transaction.

White & Case signs long-term lease at CENTRAL PARX in Frankfurt

ABG Real Estate Group and HanseMerkur Grundvermögen have secured a major leasing success for their CENTRAL PARX development in Frankfurt am Main. International law firm White & Case has signed a long-term lease as an anchor tenant, occupying all office spaces within the STUDIO and PAVILLON buildings, totaling at least 11,670 square meters. The firm also holds additional options for the remaining spaces in the TOWER. The 15-year lease agreement includes modern office spaces, 100 car parking spots, and 100 bicycle spaces.

This lease marks a significant milestone in the repositioning of CENTRAL PARX. With over 85% of the project pre-let at the start of construction, ABG Real Estate Group has opted to forgo its initial plan to self-occupy the PAVILLON. White & Case, a globally recognized law firm, is currently based nearby on Bockenheimer Landstraße, a location originally developed by ABG Real Estate Group.

CENTRAL PARX, an iconic three-part building complex situated at Bockenheimer Landstraße 10, comprises the TOWER, STUDIO, and PAVILLON, offering a total rental area of approximately 25,650 square meters. The extensive refurbishment of this historically listed property is already underway. Deconstruction and gutting work commenced at the end of 2024, with vertical construction set to begin in late summer 2025. Completion is scheduled for early 2028.

Ulrich Höller, Managing Partner at ABG Real Estate Group, highlighted the significance of this agreement: “Securing White & Case as a top-tier tenant and achieving such a high pre-letting rate at the start of construction underscores the exceptional quality of the CENTRAL PARX project. It sets a new benchmark for modern and sustainable workplaces in one of Frankfurt’s most prestigious locations.”

Malte Andes, Deputy CEO of HanseMerkur Grundvermögen, echoed this sentiment: “This lease agreement with one of the world’s largest law firms affirms the sustained demand for premium office properties in prime urban locations. The superior quality and strategic location of CENTRAL PARX make it highly attractive to leading international tenants.”

Karsten Wöckener, Head of Germany and Partner in the Global Capital Markets Practice at White & Case, expressed enthusiasm about the move: “We are delighted to have found a sustainable, future-ready location in Frankfurt with CENTRAL PARX’s PAVILLON and STUDIO. This historically significant complex, located in a prime area, aligns perfectly with our firm’s values and legacy. As we celebrate the 25th anniversary of our merger with the global White & Case, this move reflects our commitment to providing a modern and dynamic workspace that fosters collaboration and growth.”

CBRE and Hauck Schuchardt advised on the transaction.

Industry veterans launch troveinvest, a new real estate investment asset manager in Berlin

Seasoned investment and asset management professionals Ulf Christiansen, Daniel Rubinstein, and Stuart Reid have announced the launch of troveinvest, a new real estate investment asset management firm headquartered in Berlin. Specializing in value-add commercial real estate, troveinvest positions itself as an operating joint venture partner, focusing on assets with strong management potential in Germany. The company aims to establish itself as a premier boutique investment asset manager in the country.

With over 85 years of collective industry experience, the three founding partners have a long-standing professional collaboration dating back to 2011. Their extensive track record includes more than €10 billion in transaction volume, with a proven history of delivering above-average returns across various asset classes and risk categories.

“At troveinvest, we are committed to generating outperformance through operational expertise and collaborative partnerships,” said Ulf Christiansen, co-founder of the firm.

Ulf Christiansen has been a key player in the real estate investment landscape since 2011 when he joined Rockspring in Berlin, specializing in transactions. Following Rockspring’s acquisition by PATRIZIA in 2018, he became Managing Director and Head of Value-Add Transactions, spearheading strategies for commercial and residential real estate projects across Germany.

Daniel Rubinstein brings deep expertise in asset management, having joined Rockspring in 2005. He led asset management across multiple sectors, including retail, logistics, multi-let industrial, and office spaces. After the acquisition by PATRIZIA, he served as Managing Director in Asset Management, leading a 20-person team overseeing a significant retail and logistics portfolio.

Stuart Reid has extensive experience in real estate investment and development, both within Germany and internationally. He played a pivotal role in establishing Rockspring’s German office in 2001. Post-PATRIZIA acquisition, he served as Managing Director in Project Development, overseeing commercial and residential development projects as well as large-scale property renovations across Continental Europe.

Christiansen emphasized the company’s commitment to navigating the evolving real estate market with expertise and precision: “Our strongest motivation is the opportunity to shape a new real estate cycle from the beginning – and to work together again as a well-coordinated team. A team with a remarkable track record, aligned in its way of thinking. In uncertain times, it’s well-thought-out strategies, solid expertise, and consistent asset management that determine the success of investments – crucial for our partners and us.”

As the real estate sector continues to adapt to market shifts and economic challenges, troveinvest aims to leverage its deep industry knowledge and strategic asset management approach to deliver strong investment performance. The launch of troveinvest marks a significant step in Germany’s real estate landscape, introducing a new player with a well-established foundation of expertise and a clear focus on value creation.

front page info
LATEST NEWS