FM newsroom – office. A wave of new projects starts, shrinking vacancy, and rising rents are reshaping Prague’s office market. Yet, with a looming supply gap and increasing emphasis on sustainability, both landlords and occupiers are adjusting their strategies.
Construction Momentum Meets Limited Completions
The second quarter of 2025 saw more construction commencements than completions, signalling continued developer confidence despite market constraints. Four projects broke ground, in contrast to just two boutique city-centre refurbishments reaching completion.
At the end of Q2, 212,600 square metres of space were under construction across 13 projects. Still, only 26,600 square metres will be delivered this year, marking one of the lowest annual supply levels on record – Cushman & Wakefield market report points out, adding: A more substantial influx of up to 600,000 square metres is possible between 2027 and 2029. However, much will depend on preleasing commitments.
Vacancy Tightens, Competition Intensifies
The market’s vacancy rate fell to 6.6% from 7.9% a year ago, reflecting a tightening supply. Prime hubs such as Karlín, Pankrác, and the city centre recorded further drops, while some outer-city locations remain elevated, with Chodov at 12.7%. The total stock stands at 3.94 million square metres, largely stable but gradually reduced by refurbishments and conversions to other uses. The constrained supply is pushing occupiers and brokers to find efficient solutions under increasingly competitive conditions.
Leasing Balances Between Expansion and Renewal
Leasing activity in the first half of 2025 matched levels seen in the past two years, with a gross take-up of 253,100 square metres. Around 97,400 square metres came from new demand—expansions, preleases, and new leases—while renewals and renegotiations accounted for a similar share.
Owner-occupier deals were significant, with ČEZ securing space in Smíchov City and Creditas beginning construction of its headquarters in Rohan City A2, together representing roughly 61,000 square metres. In sought-after locations, negotiations are taking longer, and delayed decisions risk missing available opportunities.
Rising Rents and Shifting Pricing Dynamics
Prime office rents in Prague’s city centre remain at €30 per square metre per month, but inner-city rates climbed to €20.50, with further increases likely. Outer-city rents hold steady at €16.50. New projects entering the leasing phase are asking €35 in the city centre and €25 in inner-city areas, setting the stage for a broader market shift as supply constraints persist.
Sustainability as a Competitive Edge
With competition for tenants intensifying, sustainability credentials have become a decisive factor. Developments like Hagibor 01, which achieved a LEED Platinum score of 87, demonstrate Prague’s growing presence among Europe’s most environmentally advanced projects. Compliance with EU taxonomy and ambitions for carbon-neutral operation are now standard in large-scale developments, driven primarily by global occupiers’ sustainability goals.
Outlook: Opportunity for the Decisive
Prague’s office market remains resilient and competitive, with strong demand and rising quality standards. However, the supply gap will persist over the next two years, making swift decision-making and preleasing crucial for occupiers. For developers, tenant commitment will be key to unlocking future projects. In this environment, the market rewards those who act early—and penalises those who hesitate.