Establishing your business premises in the Czech Republic

From the view of multinational entities, Czechia still remains attractive for foreign investments. While the expenses associated with property construction and leasing have risen more compared to Western countries, its cost-effective workforce and advantageous location, particularly in the context of the near-shoring trend, add to its overall appeal.

The response to recent global challenges has created significant shifts in the dynamics of the office and industrial sectors. The traditional office demand experienced a sharp decline as remote work gained prominence. However, companies have since adapted by finding a balanced approach between in-office and remote work, leading to a resurgence in office demand, which is now above its pre-covid levels.

The industrial market, on the other hand, is already behind its peak and rapid reduction in vacancy rates. The vacancy rate is still low, but the cooling demand creates more relocation options for potential tenants. If you are considering establishing new office or warehouse premises for your business, following local commercial real estate best practices is essential.

Office premises
Real estate advisors often play a crucial role in the leasing process of office premises. The largest office market is Prague, which currently boasts around 4 million square meters of leasable space and a declining vacancy rate trending towards approximately 6 %. To secure optimal premises and conditions for your requirements, it is reasonable to start your search 18–30 months before entering the market, which will ensure a diverse range of options to choose from even in a tightening environment.

Industrial premises
During the pandemic, the industrial sector in the Czech Republic witnessed an unprecedented surge in demand for warehouse space, a trend that extended into the following year. There has been a considerable decline in demand since, but it should be noted that vacancy rates still continue to linger at low levels. Rents and energy prices have seen double-digit increases but have stabilized in recent months, and rents now start to slowly decrease.
For those considering establishing a production facility, early planning remains crucial, ideally starting the project 30-36 months before the commencement of operations. This is essential due to the typically slow permitting process and limited land availability. Despite the inflation-led wage increases, the cost of labour still remains competitive compared to Western countries, making it an advantageous environment for industrial ventures.