Prime headline office rents in Dublin and Madrid dropped by 7% and 11%, respectively. The highest increase in office rents of 37.5% was registered in Moscow and 23% in the City of London. Prague with its prime headline rent of 21/m²/month remained stable. This is according to 'Property Times', the latest analysis from international property consultants DTZ, which predicted growth of 12.8% this year in London's West End, while in large cities in Spain and Ireland office rents will continue to decline.
"In Europe, rents rose by 8.4% year-on-year, which is primarily due to the reduction of vacant office space and economic growth in Scandinavia and Central and Eastern Europe," says Magali Marton, Head of DTZ CEMEA Research, who co-authored the study. According to her the development of office rents reflects the state of the economy. In 2011, DTZ expects a 3% rise in rents in Europe.
In the described context, Prague shows no significant fluctuations. Also during 2011 prime headline rents are not forecasted to rise - this can be expected only in the following year. The situation varies greatly project by project depending on location and quality.
"Typically, rents are not expected to increase for lower quality office space located in oversupplied, non-sought after locations"," said Lenka indelářová, analyst at DTZ's Prague office. Prime headline rents range from 20 - 21/m²/month in the city center, in the inner city in 2011 prime headline rents are expected to range between 15 - 17.5/m²/month, and in the outer city from 13 - 14.5/m²/month
The number of projects built purely or partly on a speculative basis in Prague increased in the last months of 2010. The total amount of space of projects in various stages of active construction or reconstruction reached 170,000 m² at the start of 2011.
Projects that launched during Q4 2010 include the second phase of Futurama Business Park in Prague 8 (16,000 m²), City West A2 in Prague 5 (15,200 m²), and the reconstruction of Qubix (11,700 m²) next to the Congress Centre in Prague 4. DTZ expects that about 100,000 m² of new office space will be completed this year out of which approximately 70% of the office space is still available for lease.
Most offices are under construction or in the reconstruction phase in Prague 8 (72,100 m²), in Prague 4 (38,800 m²) and Prague 5 (30,800 m²). The largest completed projects this year include the fully occupied Main Point Karlín (25,700 m²), Harfa Office Park in Prague 9 (19,600 m²) and Futurama Business Park (16,000 m²).
"We are currently registering a large number of new projects. Building permits have been issued for 313,000 m² of administrative space, and zoning has been approved for projects with a capacity of another 500,000 m² of offices," added Lenka indelářová, according to whom construction starts and completion of some buildings can change quickly depending on the attained pre-leases. In 2012 another 100,000 to 120,000 m² could be completed.