According to the latest “Occupier Economics: Office market in Krakow Q1 2020” report prepared by Cresa Poland, Krakow’s office stock expanded by nearly 12% year-on-year to 1.45 million sqm. Transaction volume topped 62,100 sqm in the first quarter of 2020, up by nearly 100% on the previous quarter. Take-up mostly came from the IT (58%) and services (17%) sectors.
The largest transactions of the Q1 2020 included: 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 office building and a renegotiation of 8,000 sqm by Ericsson in DOT Office E.
“The growth of Krakow’s office market shows no sign of abating. The development pipeline comprises a number of projects including Cavatina’s Ocean Office Park and Skanska’s High5ive 3. Flexible spaces remain very popular in the capital of the Lesser Poland region, which attracted another flexible space provider Memos. Tenants are closely monitoring how events arising from the COVID-19 pandemic are unfolding. The city’s strong economic fundamentals and attractiveness to investors should, however, mitigate potential consequences for the local office market,” says Karolina Słysz, Advisor, Business Development Coordinator, Office Department, Cresa Poland.
Krakow saw two office completions in the first quarter of 2020: Buma’s DOT Office L1 (13,140 sqm) and Skanska’s High5ive 4 (20,500 sqm).
At the end of Q1 2020, Krakow’s vacancy rate stood at 10%, down by 0.7 pp on the previous quarter. Unoccupied office space amounted to almost 145,500 sqm. Supply has far outstripped demand since the first quarter of 2019.
“In January-March 2020, office absorption reached 40,300 sqm, an 84% increase on the same period last year. This was caused by the new supply totalling 33,600 sqm and the continued rapid expansion of tenants on the local Krakow market. The uncertainty regarding the scale of the impact of COVID-19 on the economy may, however, limit the space for future growth. IT-related industries which are one of the main drivers on the Krakow office market will be less affected,” says Bolesław Kołodziejczyk, PhD, Head of Research & Advisory, Cresa Poland.
Rental rates range between EUR 14.00–15,5 sqm/month in Krakow’s upper class office buildings, with lower class buildings commanding rents of EUR 10,5–13,5/sqm/month.
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. Cresa Poland is headquartered in Warsaw, with regional offices in Wrocław, Tricity, Łódź and Krakow. To learn more, please visit: www.nmrk.pl
