Kraków’s total office stock amounts to nearly 1.35 million sqm. According to reports from developers, more than 110,000 sqm is expected to be completed by the end of 2019, pushing this year’s new supply up to a record high of 200,000 sqm, according to Cushman & Wakefield.
Nearly 90,000 sqm was delivered onto Kraków’s office market in H1 2019 across 13 office projects. The largest completions included AFI Europe’s V.Offices (21,600 sqm), Inter-Bud’s Fabryczna Office Park B1 (12,600 sqm) and Warimpex’s Mogilska Office (12,500 sqm).
Occupier activity remained very robust, as evidenced among other things by the total leasing volume, or gross take-up, which in the first six months of 2019 hit nearly 135,000 sqm, almost matching the volume recorded in H2 2018, but up by 80% on H1 2018’s level.
The largest transactions on the Kraków office market in H1 2019 included SABRE’s nearly 16,000 sqm pre-let at Tischnera Office, the renegotiation/renewal of the 11,200 sqm lease by Akamai Technologies Poland at the Vinci Office Building and Ailleron’s 8,700 sqm pre-let at Podium Park. All the above deals were done by companies from the IT sector, which reported the strongest demand on Kraków’s office market in H1 2019.
Kraków’s vacancy rate stood at 10.1% at the end of H1 2019, which represented a 1.5 pp increase compared with the end of 2018, and was pushed up by the large volume of new supply coming on stream in the first six months of the year.
Prime office rents are €14.5–15.5/sqm/month. Given the healthy balance between supply and demand, rental rates are expected to hold firm in the next six months.
The Kraków office market is expected to expand by more than 110,000 sqm by year-end 2019 and to remain a leading European SSC hub.
“The current situation on the Kraków office market continues to support demand, particularly in terms of a wide choice of office locations. Kraków is attracting strong interest from both new investors including coworking & serviced offices providers and established tenants, as evidenced by the growing volume of new leases and renegotiations. New supply in the city centre accounts for a substantial share of Kraków’s office stock and is being targeted by a high number of firms. Rents hold firm at approximately €13.50/sqm/month, but headline rents in central locations are generally €1.00–2.00/sqm/month higher,” says Dariusz Madej, Senior Negotiator, Office Agency, Cushman & Wakefield.
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