kraków - Knight Frank

REPORT - OFFICE MARKET Q1 2015
KRAKÓW
THE PLACE TO GO FOR BPO
THE PLACE TO BE FOR R&D
Office market in Kraków
Poland is seen as one of the best locations
for business services centres, not only in
Europe but across the globe, while Kraków
is currently the first choice location in
Poland for foreign investors in this sector.
Service centres located in Kraków, the
capital of the Małopolska region, employ
over 30,000 people and the number is
expected to grow in the near future, taking
into consideration the fact, that in 2015,
Kraków maintained its 1st place in Europe
and 9th place in the world in the 2015
Tholons Top 100 Outsourcing Destinations
rankings. This confirms the potential of the
city and its attractiveness for foreign
Axis, Skanska Property Poland
investors, which is based on the high
volume and quality of labour resources,
and enterprises, the well-developed
economy and economic infrastructure, and
a solid real estate market, part of which is
the office market.
CHART 1
Annual supply of rentable office space in Kraków
2010 - 2015f
800 000
120 000
700 000
100 000
Kraków remains the largest regional office
dynamically developing regional hub with
sq m
market in Poland and in 2014 was the most
600 000
80 000
new supply of 105,200 sq m in 12 schemes
(the highest in the history of the local
500 000
400 000
60 000
sq m
strong purchasing power of households
300 000
40 000
200 000
market) and a record-breaking volume of
20 000
lease transactions (116,800 sq m). As of the
end of March 2015, the total office stock in
0
Kraków was estimated at 723,600 sq m, of
100 000
2010
which some 652,600 sq m was for rent, with
2011
NEW SUPPLY
2012
2013
2014
NEW SUPPLY: FORECAST
the remaining 71,000 sq m owner-occupied
f- forecast based on supply under construction in Q1 2015
space.
Source: Knight Frank
2015f
0
SUPPLY CUMULATIVE
Due to Kraków’s historic character and
limited land availability, only 15% of
CHART 2
rentable stock is situated in the city centre.
Office demand in major regional office markets in Poland
The vast majority of office space is situated
2010 - Q1 2015
400 000
the southern areas of Prądnik Biały and
350 000
Prądnik Czerwony, the corridor along Armii
300 000
Krajowej Street (in south-eastern
Bronowice) in the northern part of the city,
the western part of Podgórze, northern
parts of Podgórze Duchackie and Dębniki in
the southern areas.
As of the end of March 2015, approximately
128,900 sq m of rentable office space was
at the construction stage in fifteen
schemes, comprising both single office
2
sq m
in non-central parts of the city, in particular
250 000
200 000
150 000
100 000
50 000
0
2010
2011
KRAKÓW
Source: Knight Frank, PORF
2012
WROCŁAW
2013
2014
REMAINING 4 MAJOR MARKETS
Q1 2015
RESEARCH
OFFICE MARKET IN KRAKÓW
buildings and further stages of larger office
transactions, of which pre-let agreements
a consequence, Kraków maintains its
complexes. This is the 2nd highest level of
constituted 64%. In the previous year lease
leading position in volume of space leased
volume of construction in a regional city –
transactions amounting to 116,800 sq m of
by these tenants. According to Knight
after Wrocław (152,300 sq m). According to
office space were concluded, which
Frank estimations, approximately 40% of
developers’ schedules, some 86,500 sq m
accounted for approximately 1/3 of the
office space in Kraków is occupied by
is due to be completed in 2015, with the
volume of transactions in the six major
companies from the business services
remaining 42,400 sq m to come online in
regional office markets in Poland. The result
sector, of which nearly 100,000 sq m - by
2016. Including the 10,000 sq m completed
recorded in Kraków was 24% higher than a
tenants operating in IT and R&D sectors.
in Q1 (building E of the Bonarka 4 Business
year earlier.
Nevertheless, office markets in all major
complex by Trigranit) it is expected that
2015 will also end with an increase of
Office demand in Kraków in recent years
has been driven by companies from the
rentable office stock by nearly 100,000
BPO/SSC, IT, R&D and professional
sq m, mainly in non-central locations.
services sectors. The city remains leader
regional cities in Poland remain popular
among tenants from the BPO/SSC sector,
with their occupancy of office space
varying between 20% and almost 40%
depending on the city.
Demand for office space in Kraków remains
among major polish regional cities in terms
at a high level. In Q1 2015, approximately
of employment in companies operating in
Kraków has maintained the lowest vacancy
14,400 sq m was subject to lease
the business services sector. As
rate among all office markets in Poland
since 2012. As of the end of March 2015,
only 35,700 sq m of office space was
available for lease, which accounted for
5.5% of the local rentable stock.
The indicator is comparable to recent years,
despite the record volume of new supply in
2014, which was nearly fully absorbed by
the market.
Rents in the capital of Małopolska remain
stable. In Q1 2015, average asking rents in
A-class buildings ranged between EUR 13
and EUR 14.5 per sq m per month, while in
B-class schemes varied between EUR
10-12 or PLN 42-50 per sq m per month.
Effective rents, taking into account
rent-free periods and other incentives, are
usually some 10-20% lower than asking
Opolska Business Park, Echo Investment
rents.
CHART 3
CHART 4
Office space leased by BPO/SSC sector in major office markets
Vacancy rate in Kraków
2010 - Q1 2015
14%
Kraków
38%
Łódź
33%
Katowice
31%
10%
Wrocław
30%
8%
Tricity*
23%
Poznań
21%
Warsaw
5%
0%
20%
*including Gdańsk, Sopot, Gdynia
Source: Knight Frank
40%
60%
80%
100%
12%
20%
7%
6%
5,5%
4,9%
4%
2%
5,5%
5,1%
2010
2011
Source: Knight Frank
2012
2013
2014
Q1
2015
COMMERCIAL
MARKET
As one of the largest and most experienced research teams operating across Polish commercial
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VALUATIONS
2014 Poland in a
European context
Office market in
Wrocław: Q4 2014
Office Market
in Warsaw: Q1 2015
Commercial Market in
Poland: 2014
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[email protected]
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