Wrocław’s office market continues its upward momentum. Office take-up hit 132,100 sqm in the first three quarters of 2017, representing a 70% rise on the same period of 2016, says tenant-only real estate advisory firm Cresa in its latest report.
“Wrocław beckons tenants with an attractive investment climate and high numbers of students and graduates of technical faculties. Offices in the vicinity of the Main Railway Station currently attract the strongest occupier interest,” said Michał Grabikowski, Head of Office Tenant Representation in Wrocław at Cresa Poland.
At the end of the third quarter, Wrocław’s office stock totalled 879,600 sqm and nearly 27,500 sqm has been added to the market since January. This year’s total supply is expected to reach almost 70,000 sqm with a further 150,000 sqm scheduled for delivery in 2018. Vacant space at the end of the third quarter amounted to 74,800 sqm, representing 8.5% of the city’s total stock (a 2 p.p. decrease since December 2016). With the market continuing its upward trend and the overall volume of construction planned, this year’s absorption is likely to approach last year’s figure of 88,500 sqm.
“Wrocław is benefiting from a continued, steady improvement in sentiment across Poland. In the third quarter of 2017, the Occupier Sentiment Index in the office sector reached a level of -1 (11 points more than the average for the last four quarters) indicating tighter market conditions for tenants and greater upward pressure on rents. Despite large volumes of new space being delivered in Wrocław, the market remains in equilibrium as the demand side holds firm, fuelled by growing occupier interest,” said Bolesław Kołodziejczyk, PhD, Head of Research & Advisory at Cresa Poland.
Wrocław’s economic performance bodes well for the office market in the next years. The city has grown to become one of the world’s key SSC/BPO destinations and has scored high on cost effectiveness and quality of life on the Tholons Services Globalization City Index 2017. Due to the upcoming changes to the International Financial Reporting Standards, the largest international tenants are now seeing more benefits in freehold rather than leasehold, particularly in case of long-term leases. Cresa analysts, however, agree that Wrocław’s occupier market will continue to expand at a rapid pace.