According to “Office Occupier: Office Market in Krakow”, a report published by real estate advisory firm Cresa Poland, the leasing volume hit 157,700 sqm in 2020, down by 41% on the previous year’s level. It accounted for 77.4% of the annual average for 2015-2019. Renegotiations slightly dominated the transaction volume at 46%, followed by new agreements (45%) and expansions (9%).
“Office rents remained unchanged in Krakow last year. There was, however, greater flexibility with regard to lease durations that increasingly comprised shorter periods such as three years. Previously, the typical lease length had been five years. Shorter leases are also frequently made for office space in class B buildings. Many firms, including larger companies, have begun to appreciate the advantages of coworking offices for their short-term leases and an opportunity to rent desks or rooms for individual projects, and therefore to adjust the number of workspaces to their current needs,” says Karolina Słysz, Advisor, Business Development Coordinator, Office Department, Cresa Poland.
Krakow’s total office stock climbed to 1.55 million sqm at the end of Q4 2020, which represented a 10% increase year-on-year. Four projects with a combined area of 33,400 sqm were delivered to the market in Q4 2020. The office completions included Interbud’s Fabryczna Office Park B3 (11,100 sqm), three buildings of GD&K and Eurozone Equity: Unity Tower (15,600 sqm) and Unity Square Two (6,300 sqm), and 492 sqm of office space in the Unity Hotel.
In 2020, total leasing activity amounted to 157,700 sqm, down by 41% on the previous year. Last year renegotiations slightly dominated the transaction volume at 46%, followed by new agreements (45%) and expansions (9%). Office take-up in October-December hit 21,500 sqm. New leases accounted for 56% of the transaction volume, while renegotiations and expansions made up 37% and 7%, respectively.
The largest transactions in 2020 included: a renegotiation of 20,000 sqm by ABB in Axis office building, a 14,500 sqm lease in Tertium Business Park II (prelet, confidential tenant), a prelet lease of 8,300 sqm by Lufthansa Global Business Services in Wadowicka 3 (building B) and a renegotiation of 8,000 sqm by Ericsson in DOT Office E.
“In 2020, occupier activity was the weakest in Q4 2020. The entry of the flexible office operator Quickwork to the Ocean Office Park, which is currently under construction, was an interesting event on the market,” says Iga Kraśniewska, Research Manager, Research & Advisory, Cresa Poland.
In Q4 2020, the city’s vacancy rate hit an all-time high of 14%, up by 3.3 pp on the same period a year earlier and up by 1.6 pp on previous quarter. Absorption totalled 72,400 sqm in 2020, representing a 36.1% decrease compared to 2019, due to the vacancies rate rising quarter to quarter. In Q4 2020 alone, it amounted to 4,700 sqm.
Rents remain stable – from EUR 9 sqm/month in the southern parts of the city to EUR 16 sqm/month in central locations.
Cresa is the world’s largest commercial real estate advisory firm that exclusively represents occupiers and specializes in the delivery of fully integrated real estate solutions. It serves clients through more than 80 global offices. Cresa Poland offers unbiased, independent commercial real estate advice. Its integrated services include conflict-free tenant representation, capital markets, market research and advisory, valuation, design & project management and workplace strategy. To learn more, please visit: www.nmrk.pl
