Wroclaw, the third largest office market in the country, offers over 10 per cent of modern office space available throughout Poland. Over the next two years, Wroclaw’s office offer is to increase by 30 per cent.
We already have over 10.7 million sq m. of modern offices in Poland. Over 10 per cent of this space is located in Wroclaw. According to Walter Herz specialists calculations, over the last year, the resources of the Wroclaw office market have increased by over 12 per cent.
– Over 220 thousand sq m. of space is under construction in the capital of Lower Silesia. Almost half of the existing offices are to be commissioned before the end of this year. Today, Wroclaw market has 1.1 million sq m. of space. In two years, office resources in the agglomeration have a chance to increase by one third. Investors are encouraged to introduce new projects in this location by the exceptionally high demand for offices and the attractive capitalization rate, which in the best office buildings in the city amounts to at least 6 per cent. – informs Mateusz Strzelecki, Partner and Head of Regional Markets at Walter Herz.
New offices are quickly arriving
Last year was especially successful for Wroclaw in terms of supply growth. In 2018, the developers commissioned a record number of 150 thousand sq m. of office space. Among others, such facilities as Sagittarius Business House, Retro Office House, West Link, Cu Office A, BZ WBK, currently Santander Bank, office building, have been launched onto the market.
Most of the modern office buildings in Wroclaw are located in the very center and its surroundings. The second area which gathers business is the line along Legnicka and Strzegomska Streets, in the western part of the city.
Some of the investments currently implemented in Wroclaw is concentrated in the southern part of the city, adjacent to the area surrounding the city center. Numerous new facilities are also being built in the western zone of Wroclaw. In the third quarter of the year, for example, Skanska plans to hand over Nowy Targ office building with around 21 thousand sq m. of space. All of the offices in the building have already been leased.
One of the largest office complexes in Poland are under construction
Echo Investment has started the construction of West 4 Business Hub project at Na Ostatnim Groszu street. The investment is a continuation of West Gate and West Link, which the company has already leased and sold. West 4 will offer over 80 thousand sq m. of office space. The first building, which is to be built in the complex in the third quarter of 2020, will deliver over 15.5 thousand sq m. of space onto the Wroclaw market. The developer is also planning to start another investment in Wroclaw before the end of this year.
In the western part of Wroclaw, at Legnicka Street, Vastint company is running the construction of Business Garden project, which is the largest office facility currently under construction outside Warsaw. The investment, covering an area of 7 hectares with the garden, will include nine buildings, in which there will be a total of 117 thousand sq m. of modern office and retail space.
In the Western Business Area, Cu Office complex by Buma Group is also under construction. The investment includes the construction of two office buildings. The first with nearly 13 thousand sq m. of space has already been commissioned, and the completion of the second one is planned later this year. Thanks to Cu Office, the resources of the Wroclaw market will increase by 23.5 thousand sq m. of modern office space.
Western and southern parts of the city are under development
In the western part of the city, SQ Business Center Wrocław by FB Antczak company has recently been commissioned. The triangle-shaped boutique office building, located at the intersection of Stacyjna and Legnicka streets, delivered 5.5 thousand sq m. of space that can be purchased.
In the center of Wroclaw, Archicom started the construction of City 2 office building after handing over City One. In the second quarter of 2020, the facility will provide Wroclaw with another 12 thousand sq m. of offices. City Forum complex will deliver a total of 24 thousand sq m. of modern office as well as retail and service space.
At the junction of Powstańców Śląskich and Szczęśliwa Streets, Skanska company is also conducting the construction Centrum Południe project. The entire complex is to consist of five buildings with a total area of about 85 thousand sq m. The implementation of the first stage of the project includes the construction of two office buildings that will bring a total of over 26 thousand sq m. of modern space.
Record absorption of the office market
The i2 Development company is also planning to build a mixed-use building in Wroclaw. The developer has just received a building permit for a 11-storey building, which will include 196 premises, including 9 retail units, 82 apartments and 105 office premises measuring from 40 sq m. up to 84 sq m.
Investors are eager to locate their new projects on the Wroclaw market, where the demand for offices has been historically at the highest level for over two years. – Last year, the demand for office space in Wroclaw amounted to 165 thousand sq m. In 2017, market absorption was also record high. This trend is also visible this year. The transaction volume recorded in the first quarter of this year reached 32 thousand sq m. of space. This is a much better result than the one obtained in the same period a year earlier – notes Mateusz Strzelecki.
Vacancy rate on the Wroclaw office market has dropped below 9 per cent. Rental rates remain stable. Only in the case of the best facilities they show a slight upward trend. Rental rates in the highest standard buildings range between 13.00 – 15.5 EUR / sq m. / month. Lower-class offices can be leased in Wroclaw at the price of 8.50 – 12.5 EUR / sq m. / month.
Business services market is growing
The largest recipients of office space in the capital of Lower Silesia are companies from the business services sector. According to the data included in the ABSL report – Business Services Sector in Poland 2019, there are 169 BPO, SSC/GBS, IT and R&D centers in Wroclaw, 8 of which were established between the first quarter of 2018 and the first quarter of 2019. 47.5 thousand employees work in Wroclaw service centers. The city is responsible for over 15 per cent of employment in the sector in Poland. The annual employment growth recorded in this segment of the Wroclaw market between 2016-2019 amounts to 11 per cent. Estimated data indicate that by the end of the first quarter of 2020 employment in service centers located in the Wroclaw agglomeration will increase to 52 thousand people.
Wroclaw, apart from Cracow, the largest BPO/SSC center in our country, has specialized in business services. One third of the market belongs to the US companies, which are the main entities investing here. In addition, companies from the Nordic countries and Poland also set out for Wroclaw. Recently, sectoral investments have been implemented here by such companies as Align Technology, CD PROJEKT RED, Duco, Majorel, Olympus Business Services, Schaeffler Global Services Europe, Smith & Nephew and SoftwareHut.
