According to “Office Occupier: Office Market in Krakow”, a report published by real estate advisory firm Cresa Poland, the leasing volume hit 26,700 sqm in Q1 2021, down by 55% on the same period last year. New leases and renegotiations accounted for 50% and 48%, respectively, while expansions made up a mere 2% of total office take-up.
“The first quarter of this year witnessed more robust occupier interest in resuming conversations about office space. After a year of operating in a pandemic environment, companies know exactly what they need, what work model works for them, and are ready to make decisions, which is a very important signal for the market. Krakow’s vacancy rate continues to rise, which favours tenants who will enjoy the upper hand with landlords. That’s why now is a very good time to begin reviewing available offers and to commence negotiations,” says Karolina Słysz, Head of Krakow Office, Cresa Poland.
Krakow’s office stock reached 1.57 million sqm at the end of the first quarter of 2021, having expanded by 8.2% year-on-year. Its annual five-year growth rate averaged 18.3%.
The capital of the Lesser Poland region saw two office completions in the first quarter: Equal Business Park D (11,600 sqm) and part A1 of Ocean Office Park (7,800 sqm), both developed by Cavatina. An occupancy permit was also granted to a 2,000 sqm extension of Lubicz I Business Centre. New supply totalled 21,400 sqm, which represents a 36% decrease year-on-year.
Occupiers leased close to 26,700 sqm in Krakow in the first three months of 2021, down by 55% on the same period last year. New leases and renegotiations accounted for 50% and 48%, respectively, while expansions made up a mere 2% of total office take-up.
“More than 47% of the 150,000 sqm of office space under construction is expected to be granted occupancy permits in 2021. The largest office projects scheduled for completion in Krakow in the coming quarters include BUMA’s Tertium Business Park III and the first building of The Park, developed by White Star,” says Iga Kraśniewska, Research Manager, Research & Advisory, Cresa Poland.
The largest transactions in Q1 2021 included: a renegotiation of 11,300 sqm in Galileo, Newton and Edison buildings (by a confidential tenant), a new lease of 4,300 sqm by Ringier Axel Springer in V.Offices, and a prelet lease of 2,000 sqm by Zooplus Polska in High Five 3.
Office absorption amounted to just 2,700 sqm in the first three months of 2021, down by as much as 93% on the same period in 2020, with unoccupied office space rising to 236,200 sqm.
The city’s vacancy rate stood at 15% at the end of March 2021, up by 1 pp compared to where it was in the previous quarter and up by 5 pp on the same period a year earlier.
Rents remain stable – from EUR 9 sqm/month in the southern parts of the city to EUR 15,5 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
