New office development in Prague has plummeted since 2021, with only 72,800 sqm completed in 2024 and a projected drop to just 24,600 sqm in 2025. Meanwhile, demand has reached unprecedented levels, with companies seeking a record 637,000 sqm of office space in 2024. In a new report, Savills warns this widening gap between supply and demand is creating significant market pressure, especially in prime locations.
“Before 2020, annual office development was around 150,000 sqm, which now represents a decline of more than 50%,” said Pavel Novák, Head of Office Agency at Savills. “Currently, approximately 164,000 sqm is under construction across Prague, but 60% of this space has already been pre-leased, and another 25% is reserved.”
In other words, new tenants will have access to less than 15% of space currently under construction. The situation is most acute in Prague’s city center and Karlín, where occupancy rates for modern offices exceed 95%.
The thing is, no real relief is expected until at least 2027, when several larger projects currently in planning stages should enter the market. “Should”, being the key word in that sentence. Assuming all of those projects go ahead, companies planning ahead now have an opportunity to secure space in upcoming developments before competitors.
The construction slowdown stems primarily from the Czech Republic’s lengthy permitting process, which Savills points out can drag on for ten years in some cases. Costs mount during these delays, as construction expenses, labor, materials and energy prices continue to rise.
The worsening supply crunch is having the predictable impact on rents. Prime office space in Prague’s center now commands €28.50-€29.50 per sqm monthly, up 7% y-o-y. Other areas saw average increases of 4%, with rents ranging from €18.50-€19.50.
Novák notes that many companies are now postponing relocation decisions due to lack of suitable options. “This could create additional market pressure in the future as new buildings become available,” he said.
This continues a trend identified by the Prague Research Forum in 2023, which reported no new office construction had been launched since Q2 2022, raising concerns about future availability in key locations.
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