Total office resources on the main regional markets in the country, outside Warsaw, exceeded 5 million sq m. of space.
According to Walter Herz data, the largest regional centers in Poland – Cracow, Wrocław, the Tri-City, Katowice, Poznań, Łódź, Lublin and Szczecin – already have a total of over 5 million sq m. of office space, thanks to the commissioning of several new facilities in the recent weeks.
By the end of 2018, total office resources in the regions reached 4.95 million sq m. of space. The threshold of 5 million sq m. of space was exceeded after completing, among others, such investments as Cracow complexes V. Offices and Mogilska 43 Office, City One office building in Wrocław, as well as Heweliusz 18 in Gdańsk, Lavender Iris building in Zenit Blossom Center, and Teal Office in Łódź.
930 thousand sq m. of offices are under construction in the regions
Walter Herz analysts predict that the largest office centers in Poland will continue the cycle of dynamic development. In total, around 930 thousand sq m. of office space remain under construction in the leading regional cities in the country. Most new investments are being built in Cracow, the Tri-City and Wrocław.
A record-high level of demand for offices, which results in a very low vacancy rate recorded in all regions, is motivating the investors to implement more projects. In 2018, in the largest cities, apart from Warsaw, a total of nearly 650 thousand sq m. of offices were leased by tenants, most of them in Cracow and Wrocław.
Cracow and Wrocław are neck to neck
– In 2018, the highest level of absorption in history went along with the record-breaking new supply. Cracow and Wrocław are cities where resources have exceeded the threshold of 1 million sq m. of space and have a total of almost half of all offices offered by regional markets in Poland. In terms of supply, Wrocław is slowly catching up with Cracow, the second business center in Poland after Warsaw. Last year, a similar amount of office space was completed in Cracow and Wroclaw – around 150 thousand sq m. Today, there is over 220 thousand sq m. of office space in Wrocław under construction, about 100 thousand sq m. of which is to be completed by the end of this year. The capital of Lower Silesia has its moment now. The potential of the Wrocław market has been noticed by the largest companies investing in Poland, including Skanska, Vastint, and Echo Investment – says Mateusz Strzelecki, Partner and Head of Regional Markets at Walter Herz.
– The only obstacle to the development of the office segment in both Wrocław and Cracow are the increasing difficulties in acquiring qualified employees, which in turn is an opportunity for smaller markets, such as Katowice, Lublin, Szczecin and Bydgoszcz – adds Mateusz Strzelecki.
Boom in the Tri-City Walter Herz expert also draws attention to the Tri-City market. – Today, similarly to Wrocław, many of the largest developers operating in our country are also interested in the Tri-City. Skanska, Echo Investment and Cavatina, which is also very active in Katowice are beginning their investments in this region. At the same time, new investments initiated on the regional markets attract the attention of investment funds, which now carefully examine the markets outside of Warsaw – admits Mateusz Strzelecki.
Wroclaw’s office resources have currently reached nearly 1.1 million sq m. of space. Over the last 5 years, office segment has doubled its potential on this market. A large part of new offices is being implemented in the southern part of the city, where around 100 thousand sq m. of space is under construction. Everything seems to indicate that in the next 3 years, the agglomeration will increase its resources by one-third. Last year, developers commissioned a record number of office space in Wrocław, almost three times more than in the previous year. The largest investments completed included, among others Sagittarius Business House, Retro Office House, West Link, Cu Office A and BZ WBK office building, currently Santander Bank. In 2018, the demand for Wrocław offices amounted to 165 thousand sq m. It was a result close to the record demand in 2017.
Total office space in Cracow amounts to 1.28 million sq m. The largest projects completed last year included Equal Business Park C, O3 Business Campus and Podium Park I. Over 270 thousand sq m. of space remain under construction in the capital of Małopolska province. This year, in a dozen or so investments, developers are planning to commission more offices than in 2018, around 190 thousand sq m. Last year’s absorption on this market reached the level of 220 thousand sq m., which confirms the large potential of the Cracow market. The recorded value included one-third of the total demand seen in the regions.
Today, the Tri-City offers around 780 thousand sq m. of modern office space and ranks fourth among the regional office markets in Poland. Last year, among the completed buildings were Olivia Prime A and Olivia Star, which are a part of Olivia Business Center, the largest office complex in the Tri-City. In 2018, office space in the agglomeration increased by over 77 thousand sq m. Within the next few years, a new office hub is to be built in Gdańsk, located on the former shipyard area of Młode Miasto. In the Tri-City, about 150 thousand sq m. of offices are currently under construction, three quarters of which are located in Gdańsk. Among the carried out investments are Neon building in Alchemia office complex, Olivia Prime B in Olivia Business Center investment, GATO office building in Garnizon complex and building A in the WAVE project. In 2018, demand in this region reached 87 thousand sq m. of space.
Office market in Szczecin offers around 160 thousand sq m. of office space, but the demand for offices reported by tenants in the last two years is very high, exceeding the new supply by several times. Approximately 50 thousand sq m. of space is to be delivered in the region soon. Office, retail and service building Posejdon, Cukrowa Office, Stettiner Business Center and Kamienica Dohrma, among others, are to enter the market.
In Łódź, office resources will soon exceed 500 thousand sq m. of space. Last year, the offer was increased by about 35 thousand sq m. of space, thanks to, among others, Ogrodowa Office project and TME office building. Around 100 thousand sq m. of space remain under construction on the Łódź market, 70 per cent of which is to be completed by the end of this year. In the area of the so-called marshals’ crossroads, Monopolis complex is being built on the premises of the former Monopol Wódczany. In its vicinity, works related to the construction of Imagine office building are under way. In Nowe Centrum Łodzi, a modern business area that is currently being developed in the vicinity of the Łódź Fabryczna station, Brama Miasta is also under construction.
Such projects as React and investment at Tymienieckiego Street by Echo Investment, as well as HB Reavis project in Nowe Centrum Łódzi are at the beginning of the construction. This year in Łódź, several projects will be commissioned, with a total area of over 77 thousand sq m., among others, the first phase of the City Gate complex, Imagine office building, and the first building in Monopolis complex. Last year’s demand in Łódź reached 57 thousand sq m. of space.
Office market in Katowice already offers over half a million sq m. of space, the city has 530 thousand sq m of offices. In 2018, 55 thousand sq m. of offices were commissioned in such projects as .KTW and Silesia Business Park. The Katowice agglomeration currently has 80 thousand sq m. of space under construction, but the investments planned by developers are expected to bring twice as much space in the upcoming years. The largest market players operating in the region are GTC, Echo Investments, Vastint Poland, Trigranit Development Polska and TDJ Estate. Last year, the absorption on this market was at the level of almost 40 thousand sq m. of space.
Poznań offers 480 thousand sq m. of office space. In 2018, only 21 thousand sq m. of offices were delivered to the agglomeration, but in the near future, investors are announcing the completion of over 100 thousand sq m. of space. The two largest office investments carried out in the city are Nowy Rynek and Business Garden II. The remaining projects planned to be delivered in the nearest future include Giant Office, Mercator, and Zajezdnia Poznań. Last year, the demand for Poznań’s offices exceeded 70 thousand sq m. of space.
