New office buildings on the regional markets

According to the estimations by Walter Herz analysts,  a total of over 900 thousand  sq m of modern office space  is currently under construction on the eight largest office markets in Poland. Approximately 700 thousand sq m of office space is emerging in Warsaw.

The demand for offices in regional cities remains at a stable, high level. In major urban areas in the country, developers are leasing more space than they commission. In the first half of 2016, a total of over 220 thousand sq m of offices was commissioned on the largest office markets outside Warsaw. Almost 80 per cent of them in Cracow, Gdańsk and Wrocław. The concluded lease agreements during this period in the regions amounted to a total of almost 270 thousand sq m space. The most active tenants were in Cracow. The city was responsible for over 40 per cent of the total volume of the lease.

Modern business services sector continues to report the biggest demand for offices on the local markets. In the Tricity, Wrocław and Katowice, the companies representing the industry occupy over a half of space in the emerging office buildings. In Cracow, they lease the  ¾ of offices entering the market, say Walter Herz experts.

Cracow is an obvious leader of among the regional office markets. The supply of modern office space in the city amounts to 850 thousand sq m, and over 300 thousand sq m of offices is under construction, calculate the experts. Nevertheless, the demand for offices in Cracow is so large that the capital of Małopolska region has one of the lowest vacancy rates in the country (6 per cent.). The new offices are mostly occupied by the business services sector, which has chosen Cracow for its main center in Poland. Association of Business Service Leaders reported that over 50 thousand people is currently working in BPO, SSC, IT and R&D centers located within the agglomeration.

The developers are intensifying their operations to satisfy the huge appetite for office reported by companies in the business services sector. Cracow has never had such a large amount of office space under construction. One of the biggest office projects currently implemented is Podium Park. Decon Investment company is constructing the project at the intersection of al. Jana Pawła II and Izydora Stella-Sawickiego Streets. Three interconnected eleven-storey buildings with a total area of 65 thousand sq m will emerge in this area.

Cracow’s  Bonarka for Business (B4B) is also developing. The sixth building in the complex is currently under construction  and will offer 10 thousand sq m of class A office space. The investor – TriGranit company, announced the construction of more buildings in upcoming future. Ultimately, the facility is to consist of 10 buildings with a total leasable area of 95 thousand sq m.

Skanska company has also laid the foundation stone under their third Cracow project. It will be the company's largest office project in regional cities. High5ive complex, which will consist of 5 modern buildings, will offer approx. 70 thousand sq m of leasable area. In the first stage of the project the two six-storey buildings with the total area of approx. 23.5 thousand sq m GLA will emerge between the Ibis Hotel and Galeria Krakowska mall. Commissioning of the offices in the first stage of construction is planned for the last quarter of 2017.

Zabłocie Business Park project is being built in the area of Gustaw Herling Grudzinski, Zabłocie and Romanowicza Streets. Technobud company on behalf of IMS Budownictwo takes care of the construction work in the first stage of the complex. The first phase of the project will include the construction of a facility with 11.3 thousand sq m by April 2017. An office building ofering 14.5 thousand sq m will be constructed in the next stage.

Wrocław, the third after Warsaw and Cracow office center in Poland, is among the fastest growing markets in the country in terms of supply growth. According to Walter Herz, this year the supply of office space in the city will exceed 800 thousand sq m. Last year, Wrocław saw a record demand for office space. The capital of Lower Silesia is responsible for one fifth of total lease of office space on the regional markets in the first half of the year. Over a half of the leased space was contracted, as usual, by the companies from the sector of modern business services, because Wrocław is also one of the key locations in Poland for the business sector companies. The service centers located in the agglomeration employ over 34 thousand people.

In Wrocław, over 200 thousand sq m of offices is currently under construction. Nearly a half is to be commissioned later this year. Skanska company is implementing their next project in Wrocław. Green2Day office building is situated between the botanical garden, Ostrów Tumski and Grunwaldzki square. The seven-storey building will provide 17 thousand sq m of modern office space. Commissioning of the office building is planned for the last quarter of 2017.

Also, LC Corp began the construction of their newest office project in Wrocław. Retro House Office Building is emerging in the city center at the intersection of Piłsudskiego and Komandorska Streets. The six-storey office building, designed by Kuryłowicz & Associates studio will offer approx. 18.2 thousand sq m of office space and 2.6 thousand sq m of retail and service area. Commissioning is planned for April 2018.

Echo Investment company is implementing Sagittarius Business House I & II and Nobilis Business House projects, whereas Vastint company continues the construction of the first stage of Business Garden Wrocław project in the Wrocław Main Square.

Wrocław developer, Archicom company plans to develop the area of the former Piastowski Brewery by Jedności Narodowej Street. The investment will be divided into several stages, and its completion is planned in 2022. In total, the project is expected to consist of several buildings with office and retail function. The investor intends to begin the construction next year.

In the Tri-City, which is the fourth largest office market in Poland, a record number of offices is currently under construction. The investors also announced new projects within the next two years. Walter Herz analysts predict that by the end of 2018 the supply in the region could reach 800 thousand sq m of office space. Here, the developers also initiate new investments primarily in response to demand from business services centers, which employ almost 17 thousand people. Also, companies related to the maritime industry, including shipping, logistics and design companies, are leasing offices in the Tri-City. 

The Tri-City office market, which similarly to Cracow for the last two years have been experiencing boom, is now developing faster than ever. The agglomeration is gaining such spectacular facilities as Gdańsk’s Olivia Business Centre complex, with Olivia Star tower measuring 180 meters, as well as Alchemia office park.

In the emerging third stage of construction of the multipurpose Alchemia complex in Gdańsk, the largest building is currently under construction. Located at the corner at the intersection of al. Grunwaldzka and Kołobrzeska Street, Argon building is to be completed in the III/IV quarter of 2017. It will provide 36 thousand sq m of office space and about 2 thousand  sq m of retail and service area.

Skanska has recently purchased land in the immediate vicinity of the abovementioned office centers, located on the main thoroughfare of Gdańsk. On a plot of approx. 9 thousand sq m situated by Grunwaldzka Street, directly opposite the campus of the University of Gdańsk, the company intends to build a modern office building, which will be the company’s first investment in the Tri-City. In the next two years, the investor is planning on launching approx. 42 thousand sq m of gross office space in the facility, which will be built on the former site of Centrostal.

Several office buildings are growing in Łódź. According to the representatives of Walter Herz, the developers there are so active that in the next few years, the city can almost double the supply of modern office space. Łódź office market has approx. 350 thousand sq m of space, another 110 thousand sq m of offices is under construction.  Łódź is a nationwide leader when it comes to employment in the business services centers. The sector employs over 17 thousand people. The investors are planning new projects aimed at outsourcing companies.

Skanska is also building Nowa Fabryczna complex, with 22 thousand sq m of office space by Składowa Street in Łódź. The facility is to be completed mid next year. Around the same time, the construction of Nowa Formiernia will be commissioned. The building with 24 thousand sq m of office space, located by Kilińskiego Street is already entirely leased by mBank.

Echo Investment is currently constructing Symetris project by al. Piłsudskiego Street in Łódź. The facility will offer 18 thousand sq m of offices. Whereas Warimpex is constructing  Ogrodowa Office investment with 22 thousand sq m of office space, located by Zachodnia and Ogordowa Streets.

Avestus Real Estate company is preparing to construct two office buildings at the intersection of two main thoroughfares of the city – Piłsudskiego and Rydza-Śmigłego Streets. The project will consist of three buildings, including two office buildings with a total leasable gross area of approx. 16.5 thousand sq m, with space intended for retail on the ground floor. The beginning of the construction is planned for the first half of 2017 and the full implementation of the project is to be completed in the third quarter of 2018.

Among the bolder investments emerging in Łódź, Walter Herz specialists also enumerate Hi Piotrkowska complex, located at 155 Piotrkowska Street with 20 thousand sq m of office space, which is to be ready by 2018. Also Okam Capital company is planning to implement  Avangarda Center project in stages. In the first phase of the investment, which will offer a total of 30 thousand sq m of space, the investor will commission 5 thousand sq m of offices by the end of 2017.

The office market is also growing in Katowice. The Silesia Agglomeration has now over 400 thousand sq m of modern office space and, like the other regional markets, is attracting companies from the business services sector. Outsourcing centers in the region employ a similar number of people as in Łódź (17 thousand), and are among the key office space tenants. According to Walter Herz calculations, there is approx. 70 thousand sq m of office space is emerging in Silesia.

In Katowice, the construction of KTW building complex near Spodek arena has begun. The complex will offer two office buildings. The first building will consist of 14 floors and will measure 66 meters, the second will be 133 meters high and will be the tallest office building in the region.

The new offices will also appear on the site of the former sports arena Baildon. Katowice authorities have given the green light to the investment, which Echo Investment is planning to implement on the plot by Chorzowska Street, where the famous sports arena was located. According to development plans, the tallest building in this project will have15 floors.

In the smaller office centers in the country, where the shared service centers also appear, developers also intensity their operations. In Bydgoszcz, the construction of Arcade Business Park complex at the Fordoński roundabout has started, and will run in stages. The first of the two 45-meter buildings is to be completed in the last quarter of 2017. In each of the office buildings there will be over 10 thousand sq m of Class A office space.

Moreover, CDI company begun works on foundations of Immobile K3 office project. Five-storey Class A office building will offer a total of almost 8.8 thousand sq m of office and retail space. The investor plans to complete the construction in the first quarter of 2018.

In Szczecin, on the premises of Nowa Cukrownia complex the construction of Cukrowa Office is in full swing. A part of space will be made available for one złoty to Szczecin’s NGOs. Alsecco’s company facility with a total area of 10 thousand sq m is to be completed in the third quarter of 2018. The ground floor in the four-storey building will be designed for retail and service use. Interestingly, offices in Cukrowa Office can be either purchased or leased. The planned commissioning of the project will take place in the autumn of 2018.