Prague Research Forum Announces the Office Market Figures for Q2 2010

22 Jul, 2010, Prague

Introduction

The Prague Research Forum is pleased to announce the office market figures for the second quarter of 2010. The members of the Prague Research Forum – CB Richard Ellis, Colliers International, Cushman & Wakefield, DTZ, Jones Lang LaSalle and King Sturge – share non-sensitive information with the aim of providing clients with consistent, accurate and transparent data about the Prague office market.

Office Supply/Stock

The total modern office stock in Prague exceeded 2.7 million square meters at the end of the second quarter of 2010. Class A buildings comprise 70% of the total stock while the rest is represented by B class premises.

In the second quarter of 2010, the Filadelfie building BB Centrum in Prague 4 was delivered to the market. With more than 28,000 sq m, it is the first addition to the office stock in Prague this year. During the course of this year, approximately 24,000 sq m of additional office space is expected to be completed.

Office Take-up

Gross take-up including renegotiations and subleases reached 49,000 sq m in the second quarter, which is practically the same level as the previous quarter. This represents a year-on-year decrease of around 12 %.

The highest take-up in Q2 2010 was recorded in Prague 4 and in Prague 1, where more than half of the total volume has been transacted. Companies from the Manufacturing and Professional services sector were the top sources of take-up in this quarter.

The share of renegotiations and subleases on gross take-up decreased to around 40 % compared to 60% in Q1 2010, nevertheless, it was more than double the size of the volume on a year-on-year basis.

Significant Office Leasing Transactions

The most significant transactions included the renegotiation of Fujitsu in The Park in Prague 4 (2,540 sq m), renegotiation of Shell in Budějovická Alej in Prague 4 (2,163 sq m) and AMCICO in Millenium Plaza in Prague 1 (2,092 sq m). The largest new transaction was the 1,839 sq m lease of Fortuna in the Prague Marina project in Prague 7.

Office Vacancy

The vacancy rate has increased to 13.8 % in Q1 2010, which represents a total of approximately 373,000 sq m of vacant space. Prague 9 recorded the highest vacancy rate (27.1 %), followed by Prague 7 (26.8 %) and Prague 6 (25.0%). The lowest vacancy rate was recorded in Prague 3 (9.0 %) followed by Prague 5 (9.1%) and Prague 1 (9.5 %).

Rents

Prime headline rents remained unchanged in Q1 2010 in the city centre with a range of 20.0 – 21.0 €/ sq m/ month. In the inner city, prime rents in the Pankrac district stayed at 15.0-16.0 €/ sq m/ month and reached up to 17.5 €/sq m/month in Anděl and Karlín. Prime rents in outer city locations ranged between 13.0 and 14.5 €/ sq m/ month.

Subleases

The share of subleases (space offered for lease by a tenant who is contractually obliged to occupy the premises for a longer period than needed) on total stock decreased slightly to 1.4 % as of Q2 2010, which is approx. 38,700 sq m.

For further information please contact any member of the Prague Research Forum.

Appendix

Definitions

Stock: Total completed office space (occupied and vacant), newly built since 1992 or refurbished, A and B class offices, owner occupied and for lease. Public authorities’ buildings and buildings with leasable area lower than 800 sq m are excluded.

New supply: Completed newly built or refurbished buildings that obtained a use permit in the given period.

A Class Office Building:To earn Class A status a building must meet at least 6 out of 7 "Hard Criteria" and 5 out of 7 "Soft Criteria".

B Class Office Building: To earn Class B status a building must meet at least 2 out of 7 "Hard Criteria" and 4 out of 7 "Soft Criteria".

Take-up: A gross figure representing the total floor space known to have been let or pre-let, sold or pre-sold to tenants or owner-occupiers over a specified period of time. It does not include space that is under offer. A property is taken up when the contract is signed. Total take-up includes renegotiations, lease extension and subleases, net take-up excludes these.

Pre-lease: Active pre-leasing for an office building begins as soon as preliminary design drawings are ready to show to prospective tenants. Pre-leasing occurs until the start of construction.

Vacancy rate: Ratio of physically vacant space in completed buildings on the total stock.

Prime rent: Achieved rents that relate to new prime, high specification units in prime locations.

Sublease: Space offered for lease by a tenant who is contractually obliged to occupy the premises for longer period than what they need.

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