Wroclaw is quickly increasing its office potential

In total, around 900 thousand sq m. of office space are under construction in major business centers outside Warsaw. In Wrocław, which apart from Cracow is leading in the regions, around 210 thousand sq m. of offices are under construction. According to Walter Herz’s data, the resources of the capital of Lower Silesia today include over 1.1 million sq m. of space, which is over 10 per cent. of office facilities at the disposal of the largest urban centers in the country. Wrocław belongs to a small group of the fastest growing office markets in Poland. Every year, it increases its offer by an average of several per cent.

High market absorption

In the first half of this year, three cities: Cracow, Wrocław and the Tri-City generated over 70 per cent of total demand for office space in regional cities, apart from Warsaw. However, the volume of lease transactions in the Wrocław agglomeration was lower than during the same period a year ago. - In the first half of 2019, mostly pre-let agreements were concluded on the Wrocław market. The reason is the lack of vacant offices in the existing buildings. Vacancy rate in the city has dropped to 9 per cent. Companies that are looking for space of several thousand sq m have difficulty finding an office in the commissioned office buildings - says Mateusz Strzelecki, Partner and Head of Regional Markets at Walter Herz.

- Demand for Wrocław offices has been at a record high level for two years. Although in the early months of this year the demand for space was still very high, the following months turned out to be weaker, which does not mean that this year's market absorption will prove to be lower than recorded in the recent years. Especially because the offer of the office market in Wrocław is constantly increasing. Several investments, which are in the final stage of implementation, are to be completed this year. And by the end of 2021, Wrocław market is to gain around 250 thousand sq m. of offices. Large real estate development companies are already preparing their next projects in Wrocław, which will deliver another 100 thousand sq m. of space to the market - adds Mateusz Strzelecki.

New office buildings

This year Wrocław market gained such buildings as City One, Żmigrodzka 83, STReet Point, SQ Business Center Wrocław and Carbon Tower complex recently completed by Cavatina Holding, offering over 19,000 sq m. of space.

First tenants are also moving into Skanska’s Nowy Targ office building. The investment, which is located between Nowy Targ and Dominikanski squares in the southern part of Wrocław, has brought over 21 thousand sq m. of space.

On Powstańców Śląskich and Szczęśliwa streets in Wrocław, Skanska is also building Centrum Południe project, which will eventually offer approximately 85 thousand sq m. of space. In the first stage of construction, two buildings will bring over 26 thousand sq m. of offices. Their implementation is expected to be completed in the second quarter of 2020.

Complexes under construction

Top-class office facilities are under construction in the capital of Lower Silesia. They are one of the largest complexes in Poland. The new projects are based on the latest technological and ecological solutions and more and more often are built in accordance with the principles of sustainable development. One of them is Vastint’s investment, the construction of which is to be completed in December 2019. The implementation of the second stage of Business Garden Wrocław project, located on Legnicka street, will bring 79 thousand sq m. of modern office space. This is the largest investment that is currently under construction in the regional cities, apart from Warsaw. The complex will offer a total of 117 thousand sq m. of space.

Echo Investment is carrying out West 4 Business Hub investment on Na Ostatnim Groszu street. The facility that will provide over 80 thousand sq m. of office space is a continuation of the investment which includes West Gate and West Link buildings. The first West 4 Business Hub office building, which is to be commissioned in the third quarter of 2020, will include over 15.5 thousand sq m. of space. The developer has already announced the beginning of construction of the next investment in Wrocław this year.

Before the end of 2019, Buma Group plans to complete the construction of a second office building in Wrocław’s Cu Office complex located at Jaworska Street. In the fourth quarter of this year, the building will provide 10.6 thousand sq m. of office space. Archicom’s City 2 office building located in the center of Wrocław is also under construction. The facility will provide the city wiith another 12 thousand sq m. of offices in the second quarter of 2020.

Planned facilities

Other big projects are also planned. i2 Development company is preparing a mixed-use facility providing offices, as well as residential and retail premises.

Investments are also being prepared for take-off at Port Popowice, which is one of the largest investment areas in Wrocław, covering 14 ha. The plans assume over 2.5 thousand apartments, commercial and recreational spaces built in this area. The construction of the first office building with 13 thousand sq m. of space is to begin soon. The 7-storey building is to include a glass façade with vertical and horizontal screens, resembling razor blades, creating an alternating architectural rhythm. Vantage Development plans to complete the building by mid-2021.

Develia company is also preparing its next Wrocław implementation. The developer intends to build a modern office building on a 5.5 ha plot on Kolejowa street.

Business services are the strongest group of tenants

The largest demand for office space in Wrocław comes from the companies representing the IT industry. Tenants also include BPO/SSC sector, which is the main tenant for modern office space not only in the capital of Lower Silesia. The industry employs 48 thousand people in the Wrocław agglomeration, which constitutes about 15 per cent of employment in the sector in Poland and occupies about half of the available office space in the city. In the first half of 2019, tenants from the modern business services sector leased approximately 190 thousand sq m. of offices in the largest cities in the country, generating 25 per cent of total demand for office space at the time. Cracow and Wrocław, as the main centers of the BPO/SSC sector in Poland, had the largest share in this rental volume.

Big plans of the sector companies prove high value of our market in terms of investment. It also directly translates into the decisions of investors who implement office projects on our market and expand their property portfolio.

The largest investment transactions

Confirmation of the large involvement of investors in Wrocław was, among others, the largest transaction recorded in regions in the first half of this year. Filipino ISOC holding bought three office buildings that are part of Business Garden complex in Wrocław for almost 190 million euro, as well as Gdańsk-based Argon located in Alchemia office complex.

Like in all of the largest regional markets in Poland, the stock of flexi space is also dynamically developing in Wrocław. International operators of flexible offices are increasing their potential in the city. In the second quarter of this year, among others, Spaces, a co-working supplier of creative work space, leased 2.7 thousand sq m. of office space in the mixed-use Wroclavia center.

About Walter Herz

Walter Herz company is a leading Polish entity which has been operating in the commercial and hotel real estate sector across the country. For over seven years, the company has been providing comprehensive, specialized investment consulting services. It provides full service to companies and institutions related to the real estate market. Walter Herz experts assist clients in finding and leasing space, commercialization of investments, and project management and administration.

In addition to its headquarters in Warsaw, the company has branches in Cracow and Gdansk. The company has established the first Tenant Academy in the country, offering free of charge stationary trainings in Warsaw and other cities for office space tenants across Poland. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice. Walter Herz company is affiliated with organizations and associations supporting the development of BPO/SSC sector in Poland

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Wroclaw is quickly increasing its office potential

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