Establishing your business premises in the Czech Republic

From the perspective of multinational business entities, the Czech Republic remains a favourable country for foreign investments due to its relatively cheap workforce and lower cost of property construction and leasing in comparison with western countries.

The response to COVID-19 was generally quite turbulent, but we have seen different reactions in the office and industrial sectors. The office demand cooled down almost instantly with the rise of working from home, but it seems that the companies were able to find out the right mix of working from office and home since then. That can be seen on the high volume of office demand, which is again reaching and even surpassing pre-covid highs. We haven’t seen any decline on the industrial market and the last two years were the best in terms of demand, resulting in a rapid decrease of vacancy rate. If you are planning to start a business that requires establishing new office or warehouse premises, you should follow some guiding principles that are common on the local commercial real estate market. Most importantly, it is to some extent necessary to have a strategy that takes in to account current and future capacity needs and an acceptable lease duration, as well as a workplace strategy and a rough budget estimate.

Office premises

Most offices are leased with the assistance of real estate advisors. The largest office market, quite naturally, is Prague, which currently offers approx. 3.80 million m² of leasable premises. If you plan to open new offices, you should start your search 12-24 months) prior to market entry in order have enough options to choose from so that you will be able to find the best suitable option for your needs.

Industrial premises

Due to Covid and the supply chain crisis, there has been a record-high demand on the warehouse market in the Czech Republic in 2021, that was almost equalled in 2022 as well. Vacancy rates are staying at record lows and rents and energy prices are rising by double-digit figures in the most popular locations. If you plan to build a production facility, you should start as early as 30-36 months prior to the planned start of operations, because the permitting process is generally quite slow and land resources are very limited. On the other hand, the workforce is still significantly cheaper than in western countries and the cost of construction as well as the rent levels can be 10-15 % lower.