Business services sector is growing the fastest in Warsaw, Cracow, Tri-City, Wroclaw and Katowice
Nine largest agglomerations in our country provide investors from business services sector with professional staff, as well as extensive selection of office facilities. Companies from this segment are most likely to locate their new BPO/SSC/IT centers in five cities – Warsaw, Cracow, Wroclaw, Tri-City and the Katowice Agglomeration. The first three locations are becoming crucial for the industry.
– Warsaw, Cracow and Wroclaw constitute for almost a half of business service centers operating in Poland. Most of the people employed in this segment in our country work in these locations – admits Bartłomiej Zagrodnik, Partner at Walter Herz consulting company.
Warsaw with the largest number of new centers
Between the first quarter of 2017 and the first quarter of 2018, Warsaw saw the largest growth of business services centers. During that period, 18 new centers have emerged in the capital, where 210 such facilities is already operating. In the same period, Tri-City has gained 14 new branches, Cracow – 10 centers, and 8 centers in both Wroclaw and Katowice. The majority of BPO/SSC/IT centers opened in Poland during that year was located in these cities.
Bartłomiej Zagordnik notes that the industry-leading locations have already managed to develop their specific terms, when it comes to the categories of services that prevail there. – In Warsaw, the structure of employment in the sector is dominated by business process outsourcing (BPO). In Cracow, the most common operations are carried out by shared service centers (SSC), while in the Katowice Agglomeration, centers working in the field of information technology and research and development (IT & R+D) have gained the advantage – says Walter Herz expert.
280 thousand people employed in the business services sector
The combination of labor costs and the level of employees’ qualifications in Poland makes us a very competitive location, in comparison with Western European countries. This attracts an increasing number of investors to our country, including the world’s largest players who transfer their business to Poland.
According to the latest ABSL report, most new jobs in the business services sector from March 2017 to March 2018 were generated in Warsaw (6.8 thousand) and Cracow (6.7 thousand). Whereas, in Wrocław, the industry gained 4.8 thousand new employees. In these three centers combined, the majority of jobs were provided by sector companies within the abovementioned 12 months.
In Poland, business services sector brings together about 280 thousand employees. Over the last two years, employment in outsourcing in our country has increased by 30%, which proves the great potential of the Polish market. Forecasts indicate that at the beginning of 2020, the sector will already have around 340 thousand employees.
BFSI segment is growing faster than the entire sector
Cracow is an absolute leader in terms of the number of employed people. Almost one in four professionals representing the industry in our country is employed there. Warsaw is the second largest city when it comes to employment in business services, with over 51 thousand employees. Followed by Wroclaw, Tri-City and the Katowice Agglomeration.
According to Bartłomiej Zagrodnik, rapid growth of services centers for companies from banking, financial services and insurance – BFSI sector in Poland is particularly noteworthy. – BFSI segment is growing faster than the entire business services sector, as evidenced by the quick growth of the office space it occupies. Entities operating in banking and finance belong to tenants who are looking for large space in the best facilities – says the specialist.
BPO/SSC/IT centers are the largest tenants of office space
In 2017, business services sector in general generated approximately one-third of the demand for office space in Poland. As much as 25 per cent of space which was contracted by sector companies was leased by the entities from banking, financial services and insurance (BFSI) segment.
13 of the 50 largest banks in the world have their centers in our country, including JP Morgan Chase, HSBC, BNP Paribas, Citigroup, Deutsche Bank, Banco Santander, Royal Bank of Scotland Group, UBS, ING, UniCredit, Goldman Sachs, Crédit Suisse, Nordea. Out of 51 BFSI centers located in Poland, 17 centers operate in Warsaw, 11 branches operate in Cracow, 6 in Wroclaw, and 5 centers in Tri-City.
Over 90 outsourcing new centers in one year
According to ABSL data, there were overall 1236 business services centers in Poland at the end of March 2018, which is 91 more than a year earlier. Among the centers that have recently emerged the most (21) are investments from the US, and Polish companies with 13 units rank behind it.
According to Bartłomiej Zagrodnik, in Warsaw, as well as in regional markets where the BPO/SSC/IT sector is growing the fastest, developers are trying to secure an appropriate level of new office supply.
According to Walter Herz data, there are currently 770 thousand sq m of office space under construction in the Warsaw agglomeration. Most of the office buildings under construction will be completed after 2018. And because the demand for Warsaw’s offices is larger than the supply, the vacancy rate on the Warsaw market has now dropped to an unprecedented level, which has not been seen in the last five years.
Office markets in Poland are growing along with the BPO/SSC sector
Apart from Warsaw, Cracow and Wroclaw are developing the most. – It is not a coincidence that these are the locations where the strongest group of tenants are companies from the business services sector, which growing at a fast pace- notes Bartłomiej Zagrodnik.
Cracow, where the largest number of people in Poland are employed in the sector, has been recognized as the best location in Europe for investments in the business services sector. The city has office resources exceeding 1.1 million sq m of space. Almost 340 thousand sq m of office space are under construction in the agglomeration. According to Walter Herz’s calculations, by the end of this year, over 180 thousand sq m of offices will be commissioned.
Cracow and Wrocław with the largest increase in the regions
According to Barłomiej Zagrodnik, such a rapid increase in supply on the office market in the capital of Małopolska region is the result of a strong demand for space. Primarily from the companies providing business services. In 2017, the demand for Cracow’s offices exceeded 200 thousand sq m, of which over 100 thousand sq m was leased by entities from the BPO/ SSC sector.
Just like in Cracow, also in Wroclaw, sector companies contracted about 100 thousand sq m of office space last year. Currently, almost 290 thousand sq m of offices is under construction in the Wroclaw market. Walter Herz analysts estimate, that this year almost 170 thousand sq m of which will be commissioned. Thanks to that, before the end of this year, the office resources of the capital of Lower Silesia should exceed 1 million sq m of space.
Tri-City and Katowice are chasing the leaders
At least another two years has to pass for Tri-City to offer 1 million sq m of office space. In this market, over 170 thousand sq m of modern office space is under construction. Last year’s demand for offices reached a record value of 114 thousand sq m. The total office supply in Tri-City is now 700 thousand sq m of space.
The Katowice Agglomeration with 2 million residents has over 460 thousand sq m of office space, and about 35 thousand sq m is under construction. However, new investments continue emerging on the Katowice market. Recently, GTC announced the implementation of a new office building offering approximately 15 thousand GLA at Mikołowskiej Street. The construction is to start next year. A 130-meter-high tower which is to be constructed in the second stage of the construction of .KTW complex is also waiting to be completed. As well as two Echo office buildings in the Face 2 Face Business Campus project. The construction of one of them has just been launched.
Author: Walter Herz
