The European Office Update offers a detailed analysis of trends in the office real estate market, focusing on leasing activity and investments in Europe.
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Prague Office Update Highlights H1 2024
Prague Among the Top Five Markets by Realized Demand Volume
The office market in Europe experienced positive development in the first half of 2024. After years of stagnation caused by the pandemic, office leasing activity is coming back to life. Significant recovery was also evident in the Prague market, where leasing activity increased by 30% compared to the previous year, and new leases even rose by an impressive 70%. However, this growth was significantly influenced by the transaction related to the construction of a new 75,000 m² building for Česká spořitelna. Without this transaction, the statistics would be almost at the same level as last year, and new leases would have even slightly decreased.
Prague in the Elite of European Cities
In a European comparison, Prague ranked fourth among the top five markets by realized demand volume in the first half of 2024, just behind cities like Paris, London, and Warsaw. The main driver of demand in Prague was companies from the financial sector, while in other European metropolises, public administration dominated. However, if we exclude the mentioned Česká spořitelna transaction, the largest share of transactions would be held by technology companies, which have long been a stable pillar of the Prague office market.
Premium Offices Lead
In the Prague market, 88% of all transactions in the first half of the year involved Class A office buildings, a trend that corresponds to the pan-European interest in prime properties. Prague even topped the list with the highest share of transactions in Class A buildings in Europe, followed by Manchester and Bratislava.
Rents Are Rising, but Prague Keeps Pace
With the demand for modern offices, rents are also rising. In Prague, the prices of premium offices increased by 5.2%, placing it at 30 EUR/m²/month, which is the European average and among the most expensive destinations in the Central and Eastern European region.
Investments Are Returning
The office market in Europe is still facing the aftermath of the pandemic, especially in terms of investments, but the first half of 2024 indicates a slight recovery. In Prague, transactions worth 215 million EUR were carried out, which is double compared to last year. However, this growth was mainly driven by one large transaction – the sale of an office building on Wenceslas Square, purchased by the City of Prague. Although investor sentiment remains cautious, demand for quality properties in attractive locations is expected to remain stable. Investors will continue to be cautious and focus on modernizing or repurposing older office buildings.
