At a Glance - Office Regional Market H2 2016

Cracow, Wrocław and the Tri-City take the lead on the office market in the regions

29 March 2017

Nearly half a million square meters of modern office space was delivered to the office market in the key regional cities in 2016. The leader’s position was retained by Lesser Poland’s capital, followed by, amongst others, Wrocław and the Tri-City. According to the report’s authors at BNP Paribas Real Estate Poland, current pipeline projects will also support the high growth dynamics in 2017.

Cracow leads the pack

Lesser Poland’s capital is the undisputed leader not only in terms of total office stock, but also in terms of projects under construction. At the end of December last year Cracow had at its disposal a total volume of 955 000 sqm., 6.2% of which was awaiting new tenants. It was the arrival in the second half of 2016 of the Axis office building (20 200 sqm.), the C and D buildings in the DOT Office complex (14 400 sqm.) and the CH2M Center (14 100 sqm.) that were of significance for the Cracow office market.

For a few years now the modern business support service sector has been a consistent driving force for Cracow’s offices. It is due to the large schemes from the BPO, SSC, ITC and R&D sector that Cracow has been able to retain its dominant position as the regional leader. And yet competition in this sector is getting increasingly tougher

Małgorzata Fibakiewicz, Director, Office Agency, BNP Paribas Real Estate Poland.

Wrocław strengthened its second position with its office base standing at the end of 2016 at 846 000 sqm. and projects under construction with the total area of 179 000 sqm. The third position went to the Tri-City market with its supply standing at 620 000 sqm. and office projects in the pipeline with the total area of 125 000 sqm. Both of those markets have a similar vacancy rate oscillating at approx. 12%.

Opportunity for Łódź

The Łódź market is not slowing down and is now catching up with the leaders. Well qualified workforce, infrastructure investments and its central location are arguments for Łódź as an attractive place to locate services from the business support sector. At the end of last year Łódź took the third position on the podium in terms of offices under construction (126 000 sqm.), thus taking a lead over the Tri-City. The report’s authors stress that 34.7% of the new offices currently under construction in the city have already found a future tenant.

Over the past few years Łódź has been gaining in importance on the map of attractive office locations. In addition to good transport links, businesses locating their service centres here can count on relatively lower labour costs as compared to the “Great Three” while retaining the high level of staff qualifications. Furthermore, operating costs, including rents, are also lower

Anna Staniszewska, Director, Research and Consultancy, BNP Paribas Real Estate Poland

Vacancy rate on the rise

The second half of 2016 on the regional markets was marked by new supply, where the total volume of space delivered to the market stood at approx. 300 000 sqm. This resulted in an increase in the vacancy rate by 1.3 percentage points, which at the end of 2016 stood at approx. 11.3%. The lowest vacancy rate was recorded by Cracow (6.2%), while Katowice and Szczecin recorded its highest levels (approx. 17%).