Colliers, a provider of professional services for the commercial real estate sector, has recently published a survey focused on the regional market for office space in 2021. According to the survey, the importance of regional cities will continue to grow: both due to lower prices and the increased availability of office space. Last year, annual gross demand began to grow again after a period of stagnation, both in metropolitan areas such as Prague, Brno, and Ostrava, and also in regional cities. Photo Credit: KK / Brno Daily
Czech Republic, April 19 (BD) – Colliers’s survey provides an overview of the Czech regional market for office space in 2021. The number of companies looking for a quieter, but still dynamic location for their businesses is growing. As a result, Brno, Ostrava and other regional cities such as Pilsen, Olomouc and Liberec are gaining in attractiveness. According to Jan Skalický, Office Associate at Colliers, Brno and Ostrava should no longer be seen as ‘second options’ to Prague as destinations for businesses.
“These cities are growing, developing, and improving transport infrastructure, public amenities, and also the natural and urban landscape, all of which attract skilled workers from the Czech Republic and abroad,” he said. “Although we saw a slight increase in demand for office space in Prague and Brno in 2021, there were still echoes of stagnation caused mainly by the coronavirus-related situation; many companies were postponing decisions. In any case, 2022 looks better. We are already seeing interest in office space, especially in Brno, after the first quarter.” The survey predicts that other regional cities will also grow in importance in the future.
Growth in regional markets
Regional markets for office space are growing, and the amount of vacant commercial property is expected to decline over the coming years.
The availability of office space in Brno in particular has seen rapid expansion; the market has grown by approximately 4-5% annually in recent years and now stands at a total of 637,900 square metres, though with a vacancy rate of almost 12%, the highest in the country, compared to 7.8% in Prague and 5,8% in Ostrava.
There is also increased activity in larger cities throughout the Czech Republic, with Olomouc, Hradec Králové and Pilsen at the higher end of the range. On the other hand, the market in Ostrava has been stagnant for a long time, stalling at approximately 219,100 square metres.
Lower rents outside the capital
Compared to Prague, rents for office space in Brno and Ostrava are considerably lower. While in the best locations in Prague the rent reaches up to €24 per square metre per month, prime office space in Brno is available for €16 per square metre per month, and in Ostrava for €13. “As in Prague, we expect to see an increase in prices in both Brno and Ostrava, especially for new projects as the prices of material, labour and consumables are difficult to predict,” said Skalický, adding that price increases can be expected in other regional cities as well.
Brno, Ostrava and other regional cities offer opportunities for local developers and tenants. “Although the vacancy rate is expected to increase further in Brno, theoretically up to 15%, we also assume that the market will be able to absorb a large portion of newly delivered space within 6 to 12 months after completion,” added Jan Skalický. Another 66,600 square metres of space is scheduled to be finished between 2022 and 2024, providing a stable supply of new premises. The outlook for the sector is positive for 2022 in other regions as well.
