From the perspective of new office construction, 2025 was the weakest year in the entire history of the Prague market. A mere 26,600 square meters were delivered across five projects, four of which were renovations or modernizations of existing buildings. The only truly new office building was Perner Karlín, which was fully pre-leased even before construction began in 2023. By comparison, between 2018 and 2020, Prague added over 150,000 square meters annually; and at its peak in 2019, over 200,000 square meters of new space.

Still, this year is not expected to bring any improvement. Only 36,700 square meters of office space are scheduled for completion in Prague. Analysts do not expect a significant change until 2028, when more than 150,000 square meters currently under construction could be completed.

Offices are aging faster than they are being renovated

According to Colliers, the biggest problem facing Prague’s office market—and at the same time the least visible in daily figures—is that one-third of the buildings in Prague’s office market are now over twenty years old. By 2030, this will amount to nearly 1.8 million square meters. The share of such buildings will increase by half within five years.

This is a direct result of the slump in construction: in Prague, only a fraction of what was added to the market ten years ago is now coming onto the market, while the existing stock is aging rapidly. Buildings constructed at the turn of the millennium are now reaching technological and design obsolescence. They no longer meet energy efficiency requirements and, from the perspective of today’s corporate sustainability goals, are beginning to reach limits of acceptability.

Renovation, conversion or demolition?

Owners of aging office buildings thus face a choice. Renovation is economically demanding, as rising construction costs make repairs just as expensive as new projects that could potentially be built on the sites of the original office buildings after demolition. And converting office buildings for other uses faces a number of barriers. While the acute shortage of affordable housing, which Prague and other cities have long struggled with, certainly supports the idea of converting parts of office buildings into apartments, the reality is much more complex.

Office buildings were built with requirements that conflict with residential standards. Their deep wings with windows only along the perimeter do not allow for natural sunlight in apartments that Czech standards strictly require. The central part of such buildings remains unusable for residential purposes unless interior atriums are architecturally demolished. This significantly increases costs and reduces usable floor space. Other factors include stricter fire safety requirements for residential buildings, acoustic issues with office glass facades along busy thoroughfares, and the need to amend zoning plans: a process that typically takes five to ten years in Prague.

Moreover, even with rising apartment prices, it is not certain that conversion would make economic sense. According to current calculations, costs range from 70,000 to 98,000 crowns per square meter, depending on the final standard. This means that in many cases conversion could end up being more expensive than building from scratch. Just for comparison—the costs of a comprehensive renovation and modernization of an office building to current energy, technological, material and design standards range from 57,000 to 75,000 CZK per square meter.

Projects that show the way

Despite all obstacles, there are projects are already taking shape in Prague.

An example of a new building designed according to the city’s "short distances" standards is Hila in Brumlovka, Prague 4. This project is run by Passerinvest Group and scheduled for completion in spring 2027. It represents a completely new generation of multifunctional buildings: a commercial ground floor, office floors and above them 71 rental residential units with panoramic views. Hila demonstrates the direction the market will need to take: apartments on upper floors subsidize and revitalize the office blocks below them.

Another ambitious attempt at a true conversion is the renovation of the functionalist building that formerly served as the trade unions’ headquarters, Dům Radost in Žižkov. This building, which previously housed hundreds of offices, is set to be transformed into modern rental housing with up to 650 units.

It’s also worth mentioning the Danube House building in Prague’s Karlín district, which is undergoing a complete renovation; including the exterior surface cover (façade), internal systems and a redesign of the common areas. The building, which is already fully leased to new tenants, will command rents approximately 30% higher after the renovation.

What’s happening around the world

The conversion of office buildings into apartments is most advanced in the USA, where vacancy rates reached dramatic levels after the pandemic; rating agency Moody’s described them as the highest since 1979. In 2024, a record 25,000 apartments were completed from converted structures on that market, double the number from 2022.

In Europe, the trend is more cautious. A German study by Colliers and the ifo Institute identified conversion potential for 60,000 apartments in Germany’s seven largest cities, but only one-third of vacant office space is suitable for this type of renovation.

The British approach through the Permitted Development Rights scheme, which allows the conversion of commercial buildings into residential ones without a full planning permit, has led to the creation of over 121,000 apartments since 2013. At the same time, it has revealed its downsides: as in the past, small, low-quality apartments without windows were built.

Experience from abroad and the first projects in Prague show that the transformation of office supply will be neither quick nor cheap. This is not a one-time process, but a gradual transformation that will require coordination among investors, developers, architects and city administrators.

Will history repeat itself?

This is not the first time Prague has undergone such a transformation. As recently as the turn of the millennium, brownfields, former factories and warehouses stood in Holešovice, Karlín and Žižkov. Now, these are the most sought-after office and residential locations.

Today’s situation, however, is different—it is not about developing new neighborhoods, but about finding new uses for existing buildings. The answer will likely not be a single universal solution, but a combination of renovations, partial conversions and selective demolitions. This is not just a real estate trend, but a step toward decarbonizing the construction industry and addressing the housing crisis—and at the same time, a test of the city’s ability to respond to rapidly changing economic and social conditions.