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REPORT - OFFICE MARKET Q1 2015
THE PLACE TO GO FOR BPOTHE PLACE TO BE FOR R&D
KRAKÓW
2
Office market in Kraków
Poland is seen as one of the best locations
for business services centres, not only in
Europe but across the globe, while Kraków
is currently the first choice location in
Poland for foreign investors in this sector.
Service centres located in Kraków, the
capital of the Małopolska region, employ
over 30,000 people and the number is
expected to grow in the near future, taking
into consideration the fact, that in 2015,
Kraków maintained its 1st place in Europe
and 9th place in the world in the 2015
Tholons Top 100 Outsourcing Destinations
rankings. This confirms the potential of the
city and its attractiveness for foreign
investors, which is based on the high
volume and quality of labour resources,
strong purchasing power of households
and enterprises, the well-developed
economy and economic infrastructure, and
a solid real estate market, part of which is
the office market.
Kraków remains the largest regional office
market in Poland and in 2014 was the most
dynamically developing regional hub with
new supply of 105,200 sq m in 12 schemes
(the highest in the history of the local
market) and a record-breaking volume of
lease transactions (116,800 sq m). As of the
end of March 2015, the total office stock in
Kraków was estimated at 723,600 sq m, of
which some 652,600 sq m was for rent, with
the remaining 71,000 sq m owner-occupied
space.
Due to Kraków’s historic character and
limited land availability, only 15% of
rentable stock is situated in the city centre.
The vast majority of office space is situated
in non-central parts of the city, in particular
the southern areas of Prądnik Biały and
Prądnik Czerwony, the corridor along Armii
Krajowej Street (in south-eastern
Bronowice) in the northern part of the city,
the western part of Podgórze, northern
parts of Podgórze Duchackie and Dębniki in
the southern areas.
As of the end of March 2015, approximately
128,900 sq m of rentable office space was
at the construction stage in fifteen
schemes, comprising both single office
Axis, Skanska Property Poland
CHART 2
Office demand in major regional office markets in Poland 2010 - Q1 2015
CHART 1
Annual supply of rentable office space in Kraków 2010 - 2015f
Source: Knight Frank
f- forecast based on supply under construction in Q1 2015
Source: Knight Frank, PORF
NEW SUPPLY NEW SUPPLY: FORECAST SUPPLY CUMULATIVE
sq m
sq m
0
100 000
200 000
300 000
400 000
500 000
600 000
700 000
800 000
0
20 000
40 000
60 000
80 000
100 000
120 000
2010 2011 2012 2013 2014 2015f
sq m
KRAKÓW WROCŁAW REMAINING 4 MAJOR MARKETS
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
2010 2011 2012 2013 2014 Q1 2015
OFFICE MARKET IN KRAKÓW RESEARCH
a consequence, Kraków maintains its
leading position in volume of space leased
by these tenants. According to Knight
Frank estimations, approximately 40% of
office space in Kraków is occupied by
companies from the business services
sector, of which nearly 100,000 sq m - by
tenants operating in IT and R&D sectors.
Nevertheless, office markets in all major
regional cities in Poland remain popular
among tenants from the BPO/SSC sector,
with their occupancy of office space
varying between 20% and almost 40%
depending on the city.
Kraków has maintained the lowest vacancy
rate among all office markets in Poland
since 2012. As of the end of March 2015,
only 35,700 sq m of office space was
available for lease, which accounted for
5.5% of the local rentable stock.
The indicator is comparable to recent years,
despite the record volume of new supply in
2014, which was nearly fully absorbed by
the market.
Rents in the capital of Małopolska remain
stable. In Q1 2015, average asking rents in
A-class buildings ranged between EUR 13
and EUR 14.5 per sq m per month, while in
B-class schemes varied between EUR
10-12 or PLN 42-50 per sq m per month.
Effective rents, taking into account
rent-free periods and other incentives, are
usually some 10-20% lower than asking
rents.
buildings and further stages of larger office
complexes. This is the 2nd highest level of
volume of construction in a regional city –
after Wrocław (152,300 sq m). According to
developers’ schedules, some 86,500 sq m
is due to be completed in 2015, with the
remaining 42,400 sq m to come online in
2016. Including the 10,000 sq m completed
in Q1 (building E of the Bonarka 4 Business
complex by Trigranit) it is expected that
2015 will also end with an increase of
rentable office stock by nearly 100,000
sq m, mainly in non-central locations.
Demand for office space in Kraków remains
at a high level. In Q1 2015, approximately
14,400 sq m was subject to lease
transactions, of which pre-let agreements
constituted 64%. In the previous year lease
transactions amounting to 116,800 sq m of
office space were concluded, which
accounted for approximately 1/3 of the
volume of transactions in the six major
regional office markets in Poland. The result
recorded in Kraków was 24% higher than a
year earlier.
Office demand in Kraków in recent years
has been driven by companies from the
BPO/SSC, IT, R&D and professional
services sectors. The city remains leader
among major polish regional cities in terms
of employment in companies operating in
the business services sector. As
CHART 3
Office space leased by BPO/SSC sector in major office markets CHART 4
Vacancy rate in Kraków 2010 - Q1 2015
Source: Knight Frank
*including Gdańsk, Sopot, Gdynia
Source: Knight Frank
Opolska Business Park, Echo Investment
20%
7%
4,9%
5,1%
5,5%
5,5%
2%
4%
6%
8%
10%
12%
14%
2010 2011 2012 2013 2014 Q12015
0% 20% 40% 60% 80% 100%
Warsaw
Poznań
Tricity*
Wrocław
Katowice
Łódź
Kraków
5%
38%
30%
23%
21%
33%
31%
Contacts in Poland:
+48 22 596 50 50 www.KnightFrank.com.pl
RESEARCH
Elżbieta Czerpak [email protected]
ASSET MANAGEMENT
Monika A. Dębska – Pastakia [email protected]
ASSET MANAGEMENT – OFFICES AND LOGISTICS
Bartłomiej Łepkowski [email protected]
ASSET MANAGEMENT – RETAIL
Agnieszka Mielcarz [email protected]
CAPITAL MARKETS
Joseph Borowski [email protected]
COMMERCIAL AGENCY – LANDLORD REPRESENTATION
Izabela Potrykus-Czachowicz [email protected]
COMMERCIAL AGENCY – TENANT REPRESENTATION
Marek Ciunowicz [email protected]
COMMERCIAL AGENCY – RETAIL
Paweł Materny [email protected]
PROPERTY MANAGEMENT
Magdalena Oksańska [email protected]
VALUATIONS
Grzegorz Chmielak [email protected]
Contacts in London:
INTERNATIONAL RESEARCH
Matthew Colbourne [email protected]
© Knight Frank Sp. z o.o. 2015This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which it appears.
As one of the largest and most experienced research teams operating across Polish commercial real estate markets, Knight Frank Poland provides strategic advice, forecasting and consultancy services to a wide range of commercial clients including developers, investment funds, financial and corporate institutions as well as private individuals.
We offer:
strategic consulting, independent forecasts and analysis adapted to clients’ specific requirements,
market reports and analysis available to the public,
tailored presentations and market reports for clients.
Reports are produced on a quarterly basis and cover all sectors of commercial market (office, retail, industrial, hotel) in major Polish cities and regions (Warsaw, Kraków, Łódź, Poznań, Silesia, Tricity, Wrocław). Long-term presence in local markets has allowed our research team to build in-depth expertise of socio-economic factors affecting commercial and residential real estate in Poland.
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