According to the latest “Office Occupier: Office market in Krakow Q1-Q3 2020” report prepared by Cresa Poland, transaction volume hit 140,000 sqm in the first three quarters of 2020 and a total of 25,400 sqm in July-September. Renegotiations accounted for 47% of the office take-up, followed by new leases and expansions, which made up 44% and 9%, respectively.
“The third quarter of 2020 witnessed considerable changes to leasing activity on the Krakow office market. Renegotiations and an increase in sublease listings were a notable trend. Some tenants who had expansion options secured in lease agreements decided to give them up during lease renegotiations. Market absorption weakened, which pushed the vacancy rate up. Many companies have deferred opening a new office in Krakow until the economic situation amid the pandemic stabilizes,” says Karolina Słysz, Advisor, Business Development Coordinator, Office Department, Cresa Poland.
The Q1-Q3 2020 largest transactions 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.
“Of all the regional cities, Krakow reported the largest volume of new office space coming onto the market in the year to date: as much as 107,300 sqm, which represented a 20% increase on the same period last year despite the pandemic,” says Iga Kraśniewska, Analyst, Research & Advisory, Cresa Poland.
The third quarter saw four office completions: Podium Park B (16,400 sqm, Podium Investment), Zabłocie Business Park B (12,800 sqm, IMS Budownictwo), Unity Centre – Eastern Office Building (7,800 sqm, Eurozone Equity, GD&K Group), and Pracownia Podgórze (1,200 sqm, GS). New supply totalled 38,200 sqm. Krakow’s office stock expanded by close to 13% year-on-year to 1.5 million sqm at the end of Q3 2020.
Office absorption amounted to a total of 67,700 sqm in January-September 2020 and to 13,800 sqm in Q3 2020. At the end of September 2020, the city’s vacancy rate stood at 12.4%, up by 1.3 pp on the previous quarter and up by 2.9 pp on the same period last year. New office buildings delivered to the market in Q3 2020 accounted for a substantial proportion of vacant office space.
Rents remain stable – from EUR 10 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
