The Czech capital's office market has recorded its tightest conditions in half a decade, with vacancy rates plummeting to 5.9% at the end of 2025, down 134 basis points year-on-year. The contraction comes as new supply hit a historic low of just 26,600 m², creating a supply-demand imbalance that could reshape Prague's commercial landscape through 2028.
The shortage has triggered a development response, with construction activity surging 60% to 263,300 m², though more than 60% of this pipeline is already pre-leased or owner-occupied. Passerinvest Group commenced work on the 19,300 m² Orion project in Prague 4, whilst Mount Capital began refurbishing E Factory's second phase (5,200 m²) in Prague 9. Despite the uptick in construction, minimal completions are expected in 2026, with only 36,700 m² scheduled for delivery.
Investor and developer appetite faces a critical juncture. Whilst prime headline rents remained stable in Q4 at €29.00-30.00 per m² monthly in the city centre, market dynamics suggest imminent upward pressure after three years of stagnation. With Prague 2 district, recording vacancy at just 1.8% and Prague 8, at 3.3%, landlords in core locations are poised to capitalise on scarcity. The constrained supply through 2027 presents a narrow window for developers to capture premium yields before the 2028 delivery wave potentially rebalances the market, though pre-leasing rates suggest much of that future stock may already be spoken for.
"The current situation in the Prague office market, unfortunately, offers only a limited amount of new office space," said Petr Kareš, Head of Tenant Representation at iO Partners. "At the same time, new development projects are moving into the construction phase, with delivery expected towards the end of 2027 and in the first half of 2028. We expect this office space to attract occupiers despite a noticeable increase in rents following three years of stagnation."
Leasing activity remained robust throughout 2025, with gross take-up reaching 573,200 m², standing 8% above the five-year average. The market saw diverse sectoral demand, with manufacturing companies leading at 22%, followed by pharmaceutical and medical firms at 13%. The quarter's largest transaction was Siemens' 21,900 m² renegotiation at City West in Prague 5.
With A-class space comprising 74% of Prague's 3.94 million m² total stock and AAA buildings representing over 20%, the market's quality credentials remain strong. Net absorption of 75,000 m² in 2025 signals sustained occupier confidence, even as organisations optimise footprints. The Prague Research Forum, comprising CBRE, Colliers, Cushman & Wakefield, iO Partners, Knight Frank and Savills, continues to provide market transparency in partnership with RICS.
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People mentioned:
- Petr Kareš, Head of Tenant Representation, iO Partners
Companies mentioned:
- CBRE (Prague Research Forum member)
- Colliers (Prague Research Forum member)
- Cushman & Wakefield (Prague Research Forum member)
- iO Partners (Prague Research Forum member)
- Knight Frank (Prague Research Forum member)
- Savills (Prague Research Forum member)
- Passerinvest Group (Developer, Orion project)
- Mount Capital (Developer, E Factory refurbishment)
- Siemens (Tenant, City West)
- Johnson & Johnson (Tenant, Mechanica 01)
Prague 2: 1.8% vacancy (extremely tight, central location)
Prague 8: 3.3% vacancy (still very low, popular office area)
Prague 10: 12.2% vacancy (higher, less central)
