Germany has been Europe's preeminent commercial real estate market for many years, but today the market is experiencing a significant slowdown, mainly due to higher interest rates, rising energy costs and problems in key sectors such as the automotive industry.
"These factors lead to a decrease in investment activity and a general cooling of the market in Germany. Our recent visit to the Munich EXPO REAL confirms that development in Germany is currently not doing well, new construction has slowed significantly and many projects, especially in the office sector, have been suspended or postponed. Compared to this situation, the Czech Republic still represents a kind of island of safety," says Petr Narwa, SIOR, Head of Transaction & Consulting Services of the consulting company Prochazka & Partners.
Although there is a certain slowdown in the Czech Republic, the market still holds local capital. This is a significant difference compared to Poland, where foreign capital dominates and the market is developing here and will continue to develop at a slow pace.
"Our residential market is currently showing the best results. The office property market is also doing very well, with demand reaching similar levels to the strong 2018. Office rental prices remain relatively stable, with slight signs of decline, but are still around 20-25% higher than five years ago . Conversely, the situation on the industrial real estate market is not so favorable. In 2024, there was a correction and prices fell by 10-15%. But the last quarter of this year is marked by a recovery in demand, which gives us optimism for 2025," says Radek Procházka, Managing Partner of Prochazka & Partners.
The commercial real estate market is also increasingly influenced by the pressure to meet ESG standards and implement sustainable practices, which is reflected in the preference for energy-efficient buildings, the use of renewable resources and the reduction of the carbon footprint."Many companies are considering moving to new premises or their own building. In the case of offices, they often look for smaller, but more modern and better premises that meet all current standards," Roman Bohumínský, Senior Associate at Prochazka & Partners, describes the situation on the market.
Petr Narwa adds to this: "For industrial real estate, the rule "location, location, location" is still followed, however, not all of them have to or need to be in premium locations. Many of these locations are quite expensive and already have something »used«. That's why some companies are resorting to moving to more distant, but better quality and cheaper projects."
