Prague’s commercial real estate market is facing a significant supply shortage, with developers failing to complete a single new office building during the summer months of 2025. This dramatic slowdown marks the culmination of a multi-year trend that has seen construction grind to a near halt, creating mounting challenges for companies seeking new workspace in the Czech capital.

The numbers paint a stark picture of tightening availability. Available office space in Prague has plummeted from 318,200 square meters (8.1% of total supply) in the third quarter of last year to just 254,200 square meters (6.45%) this year, according to the Prague Research Forum. Pavel Novák, head of the office division at advisory firm Savills, notes that while demand for premium offices in the city center remains steady, prospective tenants must increasingly look toward spaces that won’t be available for several years.

So far, rental rates have held steady—the highest rates in Prague’s central district remain at 30 euros per square meter per month, roughly 730 Czech crowns. But experts warn this stability may be short-lived. As supply continues to shrink, landlords are gaining leverage in negotiations, even with existing tenants seeking to renew their leases. Jan Babka of Knight Frank points out that landlords recognize relocation represents a major investment for tenants, and with suitable alternatives increasingly scarce, they’re in a position to drive harder bargains.

The outlook offers little relief. Only 11,300 square meters are expected to be completed in the fourth quarter, bringing the year’s total to a mere 26,600 square meters—the lowest figure in Czech modern history. Next year promises only marginal improvement, with 30,700 square meters projected. This supply crisis stems from a prolonged construction freeze between mid-2022 and early 2024, when not a single new building broke ground due to weak demand and elevated interest rates.

While tenant demand has rebounded—companies leased about 80% more space year-over-year—developers remain constrained by financing costs. Radim Passer of Passerinvest notes that euro-denominated loan rates currently hover just under 4% including bank margins, while commercial real estate investors typically need rates at 3.5% or below to make projects viable. The result is a market where projects are often fully leased long before completion, forcing prospective tenants to stake their claims even before construction begins. As Novák observes, early interest not only secures better terms but also the best locations within buildings—a strategic advantage in an increasingly competitive market.