Cracow with one million square meters of offices

The second largest office market in Poland already offers over 1 million sq m of modern space.

Cracow with resources exceeding one million sq m of space remains the largest regional office center in the country. Walter Herz specialists are estimating that in the second half of the year, Cracow market may grow by over 100 thousand sq m, if the projects’ completion deadlines are met. There are about 285 thousand sq m of office space in almost 30 investments under construction.

Rapid increase in supply (over 80 thousand sq m of offices completed in the first half of the year) derives from a huge demand for office space in the capital of Małopolska region. Nevertheless, as experts point out, despite the growing offer and growth of the vacancy rate to over 9 per cent, Cracow agglomeration is still experiencing a shortage of offices, especially when it comes to large space.

The highest demand for offices on the regional markets

Demand is constantly growing. Only in the first half of the year, nearly 100 thousand sq m of offices have been leased in Cracow. That's over 70 per cent of the average annual demand recorded over the last 5 years. The largest lease contracts are typically signed by companies from the business service sector. The example of which is the recent renewing of the contract by Brown Brothers Harriman company for leasing 14.7 thousand sq m of space in Orange Office Park complex.

According to Walter Herz data, Cracow accounts for 30 per cent of the total rental volume recorded on major regional markets, apart from Warsaw (over 330 thousand sq m in the first half of the year). Most of the transactions concluded on the Cracow market are pre-let contracts. The capital of Małopolska region is an undisputed leader when it comes to demand in the regional cities, followed by Wrocław and the Tri-City.

1 million sq m of offices under construction outside Warsaw

According to Walter Herz experts, the region's highest-ever developer activity (around 1 million sq m of space in total) is currently unlikely to increase vacancy rates. The absorption of the market is so great that the new office space will quickly find tenants. According to Walter Herz calculations, in the second half of the year, office space in regional cities has a chance to grow by around 330 thousand sq m, with the largest share in Cracow, the Tri-City and Łódź.

Business services sector is the key factor in the development of the regions, including the Cracow market. Companies from the industry are moving to our country, because of access to a wide range of qualified professionals, cheaper than in Western Europe, as well as lower rental rates. Whereas, investors who already are present in Poland, continue to expand the structure of their centers.

Business services sector is the largest investor in the regions

Shell Business Operations Kraków, opened in the middle of the year by Shell petrochemical concern in Cracow is a good example. The company employs 2.7 thousand professionals in the facility. Recently, the investor has obtained another permit for its Cracow center, located within the Special Economic Zone, where another 300 people will find employment. The service center is located in four buildings designed specifically for the company, with 26 thousand sq m of office space.

Axis office building with 20 thousand sq m was officially opened in the middle of the year, nearby Mogilskie roundabout. ABB company, specializing in technologies for power engineering and automation, has its Global Shared Service Center in the facility.

Expansion of the area nearby Mogilskie roundabout

A new multifunctional Cracow business center - Unity Center will also be built by Mogilskie roundabout. The complex with office, retail, service, and hotel function will consist of five buildings of varying scale. The building will emerge from the reconstruction of the existing NOT skyscraper and the construction of four new buildings. The largest, the 27-storey Unity Tower (Tower A), measuring over 102 meters and offering 16, 5 thousand sq m of gross lease space, will be the tallest building in Cracow.

The contract for construction of the facility has been signed recently. Construction of the entire complex is scheduled to last until January 2020, and completion of fit-out work in all of the buildings is planned for June 2021. The complex, which will provide 46 thousand sq m of space, including 30-32 thousand sq m of offices will be distinguished by, among others, Cracow's highest observation deck connected with a restaurant with glass walls.

Grand scale investments

Mogilska Office project, which is to be finished by the end of 2018 is also under construction. The investor is already planning another investment in Cracow, to be built in the vicinity of the Chopin hotel. Chopin Office complex is to provide 21 thousand sq m of office space and 5 thousand sq m of retail and service space. The investment will be completed in 2019.

Moreover, the development of the Equal Business Park is underway on Wielicka Street. Construction of a third office building included in the investment of over 22 thousand sq m is expected to end in the second quarter of the upcoming year. Recently, Equal 2 building was also commissioned, which added over 18 thousand sq m of offices. The investor is also preparing the construction of Tischnera Office project, located at Zakopiańska and Księdza Józefa Tischnera Street, which will increase the amount of office space in Cracow by another 32 thousand sq m of space.

Podium Park is also among the largest projects in Cracow. It will provide over 65 thousand sq m in three buildings, including over 47 thousand sq m of office space and over 3 thousand sq m of retail and service space. The first stage of the investment, located at the intersection of al. Jana Pawła II and Izydora Stella-Sawickiego Street, is due to be completed in June 2018.

In the middle of the year began the construction of the first stage of Fabryczna Office Park, which is due to be finished at the turn of 2018 and 2019. The facility will consist of three office buildings to be included in a larger project - Fabryczna City. The investment built on the site of the former Polmos factory, involves creating a small city in which apart from the office buildings there are the residential buildings and the extended retail and service area located in historic buildings.

About WALTER HERZ

Walter Herz is a leading Polish company operating in the real estate development sector, providing comprehensive, specialized consulting services. The company offers comprehensive services to the entities associated with real estate market, advising commercial tenants, property owners and investors. It assists companies in finding and leasing space as well as commercializing investments.

The company provides investment consulting services, develops financial analysis, and assists clients in managing and administrating projects, based on comparative analysis and market research.

Walter Herz consultants are looking for opportunities to take advantage of the full potential of the market to achieve results that exceed customer expectations. The company structure includes specialized departments that team up project managers, who perform dedicated tasks, which allows for maximizing the value of customer transactions. The agency also provides architectural support.

The company cooperates with private and institutional investors, real estate developers and investment funds, providing clients with full access to information, contacts and market analysis.

The agency is affiliated to organizations and associations supporting the development of the BPO/SSC sector in Poland. Striving for the highest level of professionalism in cooperation with customers and business partners, as well as the highest ethical level of services provided, the company introduced the Code of Good Practice.

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Cracow with one million square meters of offices

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