According to the latest CBRE EMEA Research Study ‘EMEA Offices’, economic woes in the Eurozone and the uncertain outlook continue to affect occupier demand and constrain leasing activity levels.
In the first quarter of the year, net take-up in the key Western European markets dropped to approximately 2 million sq m (a decrease of 22% q-o-q and 9% y-o-y), its lowest quarterly total since 2009. Across Europe, leasing activity remains primarily driven by lease breaks and expiries and companies’ desire to reduce occupancy costs and optimize the use of space. New completions are now at the lowest levels in many cities, however the weakness of demand and continued release of space by occupiers are hampering a faster reduction in vacancy rates. With the level of new supply falling, the quality of available space also continues to deteriorate. This is restricting occupier choice of large, good quality units, especially in central areas. By contrast, supply of second-hand space is rising in many markets, and when the building is also outside the main office areas, even lower rent is often insufficient to generate enough interest from occupiers. The latest developments on the Prague office market are very similar to current European-wide trends. Bert Hesselink, Head of Office Agency CBRE Prague comments: “We are in the midst of a tenants´ market with occupiers benefiting greatly from current market conditions. Nevertheless, as in the rest of Europe, availability of good quality office space is indeed diminishing, albeit slowly, and we can see the first signs of conditions for landlords to lease office space improving again towards the end of 2013 going into 2014 – especially at the top end of the market and depending on location.”