Prague’s real estate market faces a significant transformation as nearly half of its office buildings require modernization to meet contemporary corporate needs and EU environmental standards. While Prague’s situation is relatively favorable compared to other European cities like Milan, Barcelona, and Paris, where over 80% of buildings are becoming obsolete, about 47% of Prague’s office buildings need updating, according to a study by Cushman & Wakefield.
Building owners and tenants are under increasing pressure from banks to invest in renovations that prioritize sustainability and ecological standards. This push aligns with an approved directive aiming for all buildings to be climate-neutral by 2050. Buildings that fail to modernize risk becoming unmarketable and essentially unusable.
The post-pandemic shift to hybrid work models has accelerated this transformation. As Radka Novak, head of office leasing at Cushman & Wakefield, notes, “In Western Europe, hybrid work has left more offices empty, creating opportunities for residential conversion.”
A prime example of this trend is Prague’s House of Trade Unions, now known as Dom Radost. The building’s current owner, the Vala family, plans to convert it into 600 small rental apartments. Other developers, including YIT, J&T Real Estate, and Penta Real Estate, are also considering similar conversions or shifting their new construction plans towards residential projects.
While this trend is just beginning in Prague, it’s already well-established globally. Madrid has converted over 300,000 square meters of office space into residential units and hotels in the past four years, while American cities are set to create more than 55,000 apartments through similar conversions this year alone.