PRAGUE OFFICE MARKET Q3/2023

In the third quarter of 2023, the Prague Office Market exhibited subtle dynamics, primarily influenced by heightened construction and relocation costs. The cessation of development activities resulted in a scarcity of premium office spaces, notably in the broader city center in Karlín, Anděl, Pankrác, and Smíchov. Faced with escalating relocation expenses, companies tended towards renegotiating existing leases rather than opting for new spaces. Renegotiations among established tenants suggest a trend of divesting excess spaces, while companies in search of new locations increasingly prefer pre-equipped and renovated spaces in the wider center of Prague. We foresee a lack of modern office supply due to the absence of new constructions since spring 2022, setting the stage for a stagnating market. Another layer of evolving dynamics is added by the impeding green transformation and requirements for ESG reporting. These factors will adversely impact especially older objects, which will require renovations to stay up to date with the newest regulations.