New supply in Prague achieved historical record in 2008 (CZ)

According to the latest survey of CB Richard Ellis, the amount of modern office space in Prague currently totals ca. 2.5 million m². With 91,000 m² of modern office space completed in Q4 2008, the overall completions in 2008 achieved a record amount of 323,100 m².

Despite lower take-up of 51,000 m² in Q4, 2008 as whole proved very strong with 260,300 m² leased which was close to the historically strongest year 2006 which saw take-up of 285,500 m². 2008 take up in Prague was almost 23% lower that in Budapest, although the total office stock of the Hungarian capital is still below that of Prague.

Jan Lovětínský, Head of Office Agency at CB Richard Ellis comments on rents: "Prague prime office rents remained stable in all submarkets in Q4 2008 in comparison to Q3 2008. With regard to the City Centre, we witnessed a rental correction in Q3 2008 with the prime rent increasing to the current level of EUR23/m²/month. We believe that current demand is not sufficient to push prime rents higher in the first half of 2009."

Approximately 63% of the new quarterly supply had already been leased in Q4 2008, thus the city-wide vacancy rate this quarter increased only marginally. However, from a year-on-year perspective, net absorption in 2008 (230,000 m²) was not sufficient compared to the amount of completions (323,100 m²) and the vacancy rate increased by 3.2 p.p. to the current level of 8.96% in 2008. The vacancy rate for class-A buildings was 10.3% in Q4 2008, an increase from 5.7% in Q4 2007, whereas the vacancy rate in class B buildings remained stable at around 5.5%.

The most significant completions in 2008 were:
• City Tower – 43,800 m² (Prague 4)
• Kavčí Hory Office Park – 36,800 m² (Prague 4)
• Gemini B – 15,900 m² (Prague 4)
• Palladium – 19,500 m² (Prague 1)

The major transactions closed in 2008 were:
• Raiffeisen Bank – 17,500 m²
• Siemens – 24,000 m²
• Ceska Sporitelna – 12,700 m²

Source: CB Richard Ellis

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