Krakow retains the crown as Poland’s largest regional office market as it saw its office stock rise by 17% in the past year to 1.16 million sqm, says real estate advisory firm Cresa in its latest report.
In the first half of 2018, total leasing activity amounted to 77,200 sqm, down by 21% compared to last year, most of which was transacted under new leases (58.3%). Key lease transactions included State Street’s nearly 9,000 sqm lease at .BIG, the 8,500 sqm renegotiation by BGŻ BNP PARIBAS at Avatar and the National Science Centre’s nearly 5,500 sqm lease at Moon Office.
“Krakow’s economic and scientific potential continues to attract firms from the business services sector, making the city one of Europe’s leading BSS locations. Strong development activity keeps office rents stable and tenants enjoy an increasingly wide choice of attractive office space. Due to Krakow’s urban features, office buildings are well dispersed across the city with most office buildings located along dual carriageways,” said Karolina Słysz, Business Development Coordinator in the Krakow office of Cresa Poland.
Nearly 60,000 sqm of office space was delivered across nine schemes in the first six months of the year, including Echo Investment’s O3 Business Campus III (19,200 sqm), Skanska’s High5ive 1 (11,300 sqm) and Skanska’s High5ive 2 (9,300 sqm).
The city’s vacancy rate has been steadily rising for the last five years, now at 9.3%. Headline rents stand at €13-14.50/sqm/month in Krakow’s city centre and at €10-14/sqm/month in non-central locations.
In the first half of 2018, absorption hit nearly 60,000 sqm, up by more than 6% on the same period last year. The Occupier Sentiment Index in Poland rose by 33 points year-on-year, reaching a level of 24 points, which bodes well for further rapid expansion of the Krakow office market,” said Bolesław Kołodziejczyk, PhD, Head of Research & Advisory at Cresa Poland.