Subsequently rents fell during the 1990s as more offices were developed and the capital was swamped with accommodation. However, over the last few years, rents for modern offices have remained stable. 'Modern office rents are now at much more sustainable levels when compared to development costs,' said Paul Betts, King Sturge partner in charge of Prague.
Supply of modern offices is now relatively low with just 137,860 sq m of space under construction. Demand, by contract, is strong, following the improvement in the economy. Take-up is forecast to be 140,000 sq m in both 2001 and 2002. Consequently, the overall vacancy for new builds is likely to continue to fall from 9.4% to less than 5% in 2002.
The change in the supply and demand equation has forced the emergence of an office investment market at the beginning of 1999. Since then, there have been ten major office investment transactions totalling over $200 million.
Betts added: 'The office market has continued to mature and now has both active occupational and investment activity. The historic nature of the central area continues to limit the development in this zone but we are witnessing exciting new development plans for city fringe areas which we expect to dominate the market in the next five years.'
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