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Cracow with one million square meters of offices

Cracow

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.

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.

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.

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