• 10,000 sqm of office space was delivered to Katowice’s market in 2019
• Gross take-up amounted to 82,300 sqm, up by 115% on 2018
• The city’s vacancy rate stands at 5.6%, down by 3.2 pp
• Net absorption climbed to 24,600 sqm, outstripping new supply
• Headline rents remained flat at €14/sqm/month

Supply

With 528,400 sqm of office stock, Katowice is Poland’s sixth-largest office market, which expanded in the last 12 months by nearly 10,000 sqm delivered across three office projects. Last year’s completions include Opal’s two office buildings with a total area of 8,400 sqm at 28 and 28a Bracka Street, and the fully refurbished Porcelanowa 60.

Although development activity was muted in Katowice throughout 2019, there is now more than 210,000 sqm of office space under construction across 13 projects. The largest schemes in the pipeline include Echo Investment’s Face2Face (46,800 sqm), TDJ Estate’s second phase of .KTW (39,900 sqm) and Cavatina’s Global Office Park (more than 59,000 sqm).

“Developers are being driven to invest in Katowice by various factors, the population of the metropolitan area being key to all. Apart from Warsaw and Katowice, there is no other area in Poland with such superb transport links and more than 2.3 million people” says Tomasz Dyba, Negotiator, Cushman & Wakefield.

Take-up

Katowice’s leasing activity hit 82,300 sqm in 2019, representing more than a twofold increase in 2018. New leases accounted for 56% of all deals while renegotiations and expansions made up 28% and 14% of the transaction volume, respectively. The largest deals included the renegotiation of the 8,650 sqm lease by IBM in A4 Business Park I, the renegotiation of Unilever’s lease for 7,300 sqm lease in Nowe Katowickie Centrum Biznesu, the Perform Group’s 6,400 sqm lease in Face2Face Business Campus I, Honeywell’s pre-let for 6,350 sqm in Face2Face, followed by Capgemini’s deals for 5,600 sqm in Atrium and for 2,200 sqm in Brema.

Vacancies

The relatively robust occupier activity in the last 12 months pushed Katowice’s vacancy rate down to 5.6%, which represented a 3.2 pp decrease on 2018. This relatively sharp fall was reflected in net absorption which amounted to 24,600 sqm and outstripped new supply.

Rents

In the first half of 2019, prime office rents stood at €14.00/sqm/month.

“The highest rents are in office buildings in the very heart of Katowice which enjoy easy access by any means of transport from the whole of Silesia and the high availability of various services making daily life easier,” says Tomasz Dyba.

Outlook

Nearly 70,000 sqm of office space is scheduled for delivery across seven projects in 2020. Of that total, a substantial proportion has already been pre-let. Projects that have recently broken ground in response to the robust occupier interest in the new office built include Global Office Park and .KTW II. Katowice is likely to see 45,200 sqm and 67,400 sqm delivered in 2021 and 2022, respectively, with the annual growth in office stock averaging 10% in the next three years.

 “This intense competition will improve the quality of newly built in Katowice and force landlords to pitch more aggressively offering advantageous financial conditions, which will strengthen Katowice’s competitive edge over other cities,” adds Tomasz Dyba.