Establishing your business premises in the Czech Republic

From the standpoint of multinational entities, the Czech Republic remains attractive for foreign investments. While the expenses associated with property construction and leasing have risen compared to Western countries, its workforce is still cost-effective and the advantageous location, particularly in the context of the near-shoring trend, adds 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 an abrupt slowdown as remote work gained prominence. However, companies have adapted by finding a balanced approach between in-office and remote work, leading to a resurgence in office demand, even surpassing pre-crisis levels.

Contrary to the uncertainties in the office sector, the industrial market has thrived over the last two years, witnessing its peak in demand and a rapid reduction in vacancy rates. While the vacancy rate is still low, the demand starts to cool down a bit, which creates more relocation options for potential tenants. If you are considering establishing new office or warehouse premises for your business, adhering to guiding principles prevalent in the local commercial real estate market is essential.

Office premises

For office spaces, real estate advisors often play a crucial role in the leasing process. The largest office market, notably in Prague, currently boasts around 3,9 million sqm of leasable space with a stable vacancy rate of approximately 8 %. To secure the ideal premises for your needs, it is advisable to initiate your search 12-24 months before entering the market, which ensures having a diverse range of options.

Industrial premises

During the first year of the pandemic, the industrial sector in the Czech Republic has witnessed an unprecedented surge in demand for warehouse spaces, a trend that extended into the following year. Although there has been a slight cooling of this demand since, it is noteworthy that vacancy rates continue to linger at low levels. Costs such as rents and energy prices have registered double-digit increases, but start to stabilize in the recent months as well.

For those considering the establishment of a production facility, early planning remains crucial, with an ideal starting point being 30-36 months before the commencement of operations. This foresight is essential due to the typically slow permitting process and the limitation of available land resources. 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.