Colliers International sees an opportunity in modernization of older office buildings
Demand for modern offices strong in 2015
Prague, 18 February 2016 – Colliers International today announced the latest data on the Prague office market for 2015, which also predicts future trends.
According to Colliers International, 2015 experiences high demand for modern office buildings. Of the total take-up amounting to 447,000 square meters, 90% represented the demand for class A buildings. Currently, there is more than 3.2 million square meters of office space on the market, of which 69.5% are class A offices. Some 190,600 square meters of office space was completed in 2015, which is 26% above the ten-year average. In 2016, Colliers International expects a significant decline; the market will be supplied only with 32,600 square meters of office space, the least since 1993.
Colliers predicts that the demand for class A office space will continue. However the age profile of many of those offices counted within class A stock is increasing. Currently, 53% of offices on the market are more than 10 years old. According to Colliers International, it will be necessary to fundamentally refurbish and rejuvenate a number of office buildings to stand a chance of being successfully released.
“Given that in 2016 only a small number of offices will be completed, we see an opportunity for landlords to modernize older office properties,” said Ondrej Vlk, Head of Research at Colliers International Czech Republic. “This trend will become even more pronounced. Buildings completed in the 90’s and in the years from 2000-2005 will sooner or later need a complete reconstruction of its technology, plant & machinery, common areas and office interiors, in order to be able to compete with leases of offices in modern, newly constructed buildings. Owners who begin the recovery now can significantly improve their occupancy rates, achieve a fair market rent and in turn increase the value of the asset.”