Asked to name the five biggest players slugging it out in the Czech office development ring, agents usually start with the three major office park producers: AIG/Lincoln, busy for years with the hugely successful scheme The Park down in Prague 4; PasserInvest, offering regular phased delivery and sales at BB Centrum; and Doughty Hanson, where the third building out of the four on the blueprint for Butovice Office Park has been completed lately. However, there are more candidates than space on the list allows, with views diverging at this point. As for strategies on starting construction, leasing and exit, Prague's developers display a rainbow of flavors. Europolis, currently enjoying success in leasing Nile House, the latest addition to their River City scheme, are strong contenders, as well as ECM, whose plans include at least a further 80,000 sqm at their multifunctional City scheme at Pankr&c. Karimpol is nearing completion on the aesthetically challenged Diamond Point, where investor Allianz will be the sole tenant. They also remain busy at Andel Park, a project proving attractive to tenants. Skanska scores with Bredovska dvur: the city center property sold to Sachsen Fonds, and Budejovicka Alej, currently close to completion on the doorstep of the metro station with a transaction expected early next year. Immorent has a different approach to most of the pack, choosing to pre-sell Avenir Business Park, a relatively small scheme in Prague 5. To date, of the three buildings planned, one has been completed. "It will be a forward purchase where they agree the rent, yield and price; they sell it, find tenants and build it," Mark Richardson of C&W HB says. At the same time Immorent have plans for a scheme at the former bus station in Pankr&c. Surprisingly perhaps, agents don't tend to mention Sekyra Group, who claim a whopping 300,000 sqm is on the cards. It could be a case of sour grapes, since the company doesn't tend to require brokerage services. "Until they build something speculatively, they don't need us," comments one agent. Myk Gallery on Vodickova street could be the case in point, although on their other major scheme Centrum Opatov, Sekyra is still waiting for a pre-lease. It's an atypical developer in Prague in that the company tends to prefer long-term leases in buildings that are built to suit. Sekyra has stuck to this strategy ever since completing the T-Mobile headquarters at Chodov. It sold at a 7 percent yield in no time to CPDP, a fund with Sekyra Group as a manager and a shareholder. The transaction came as a surprise not only because of the high price, but it was also the first sale by a developer that was known to hold their schemes until then. "You can't do that on three or five year leases, but you do it for seven, ten, or even longer; especially if you're selling to a fund anyway. Funds will take it into account, as long as you got the lease length," says Richard Curran, head of agency at CB Richard Ellis. With all these elements in place, the developer is on easy street, perhaps the only disadvantage being the leverage that a large tenant signing a pre-lease can have. "If you have the lease contract signed before you start building, your financing is much cheaper and a lot easier to get, and you have your exit secured. Then, you can also sell it before you start building, have it totally financed, and sell before you even invest real money," he adds. PasserInvest is now aiming in the opposite direction. Although rumors have it that Beta building at BB Centrum is selling at 6.5 percent right now; which means another benchmark transaction after the sale of Alpha last year. At the same time the developer says it'll hold the projects in the pipeline such as Gamma (30,000 sqm going up speculatively) and E building (14,000 sqm pre-lease to CEZ). With 100,000 sqm built, and a similar amount to come, this turnabout came at the mid-point of BB Centrum's development. Zbynek Passer, Chairman of the Advisory Board, PasserInvest, explains that there's no longer pressure to sell to secure financing for further phases, and that they don't want to lose control of the area. "As long as a certain number of the buildings remain under our control we're able to influence the services in the complex, its make-up, and quality, which are things that are quite important to us," says Zbynek Passer. "The reason is also that tenants are starting to demand shorter leases, and that's where the business is going to go. PasserInvest now is working on a product they can hold themselves, and so offer a more flexible lease structure. They can then secure a tenant. Its more like cash flow than end yields," Andrew Thompson of C&W HB explains. Doughty Hanson have also kept hold of Nove Butovice Office Park, where development arm Central Resource have just completed the third building and secured a construction permit for the fourth, set to start going up in the new year. Plans for the Metronom and Office Plaza phases across the street are up in the air at present. At The Park, AIG/Lincoln has also held. This allows tenants like Accenture the flexibility to grow another 1,000 sqm a year should they need. "The biggest office developer in the market by far" according to some, they've just started the eighth of twelve buildings planned in Prague's fourth district. They're also looking to acquire adjoining land plots, according to Curran. "Potentially the scheme could grow as far as the petrol station on one side and the new shopping center on the other, and keep them busy for years," he says. Unlike their other office projects, Katerinska Business Park sold to Ryanair Pension Fund, (or Irlandia), and Florence Office Park to German open end fund Dekka, it seems AIG will keep this one within the group. "Although there are various rumors, I understand that AIG/Lincoln may actually put this product into their internal fund based in America, which would be unusual," Richardson said. There's no such gossip surrounding Europolis, the real estate arm of Investkredit Bank that the EBRD took a share in back in 2001. After they're developed, schemes goes straight into the the group's own fund. Earlier this year however, 49 percent of Europolis C1 portfolio, plus the entire Hadovka office building was offloaded to DIFA. Meanwhile, Europolis continue to go forward somewhat aggressively along the riverbank in Karlin. Despite working a difficult district since it was hit so hard by the 2002 floods, with vacancy still creeping over 20 percent, Europolis is close to leasing all 20,200 sqm of River City's first phase Danube House. Meanwhile Deloitte are set to move into 6,000 sqm of the second phase. The consultants have a healthy chunk of around 40 percent of the 17,900 sqm Nile House, space they originally intended to occupy in Diamond Point. Although rental levels and prices in Prague are still a concern following recent unpleasantness, the stage on which these players perform has been relatively stable over the years, and convalescing demand now seems to justify the optimism emerging throughout the market. Nevertheless, Curran strikes a note of caution. "There are other factors that influence real estate, but based on lease cycles of five years you can make predictions: 2000 was a very strong year, this year will be very strong, too." However, this logic would point to problems coming up, as 2001 was a bad year for the market, fueling fears of increasing vacancy rates. "Above 15 percent developers usually get nervous, reacting quickly to lower rents or increase incentives," he explains. "If too many do this at the same time, it can lead to something of a plunge in the market. Rents fall or incentives increase: so instead of three months rent free they offer six months rent free. At the end of the day, it's still a rent fall, just expressed in a different way."