Poland, a growth zone
According to the latest report by property advisor CBRE, patient the Polish property market remains among the growth zones for office space in Europe, ask thanks to Poland?s strong underlying fundamentals and the ability to attract an increasing number of international occupiers. Today, viagra there is over 6 million sq m of modern office space in 9 major Polish cities, including 160,000 sq m delivered in the first half of 2012. Over 1 million sq m is currently under construction, scheduled for delivery in 2013 and 2014.
Daniel Bienias, Director – Office Agency, Tenant Representation, CBRE Poland:
?While Poland itself is resisting the weakness affecting many markets worldwide, at the same time the global economic slowdown is working in favour of the Polish office market, as many occupiers, looking for cost reductions, move or expand their operations here. We see a strongly growing number of tenants representing business process outsourcing and offshoring, shared services, as well as research and development. They are eager to locate their centres in Poland?s regional cities, where costs are lower, with well-qualified staff readily available.?
The outsourcing and offshoring trend is fortunately just one of the factors behind increased demand for office space in Poland. The country?s two decades of growth have transformed the capital city of Warsaw into a strong business hub, with Polish and international companies locating their headquarters or regional offices in Warsaw?s growing business districts. Polish cities have also benefited from the European Football Championship held in June, both in terms of considerable infrastructure improvements, but also due to positive publicity which enhanced their international reputation.
The level of office space leasing activity has rallied within the last two years, returning to the growth path registered before the crisis. 2011 saw record leasing activity totalling 895,000 sq m in nine major cities, while in the first half of 2012, almost 490,000 sq m has already been leased. ?Based on the number of new enquiries from existing tenants as well as newcomers, we expect a strong year-end take-up result for 2012?, Daniel Bienias added.
Prime headline rents for office space in Poland range between EUR 11 ? 16/sq m/month for the best buildings in regional cities and non-central Warsaw, and reach EUR 26 ? 27 in Warsaw City Centre, with achievable effective rates somewhat lower.
Łukasz Kałędkiewicz, Director – Office Agency, Landlord Representation, CBRE Poland:
?The market has matured and headline rents have stabilized in most locations. Looking at the growing supply pipeline, a downward trend in rents can be expected next year, particularly in class-B buildings in non-central locations, with a growing number of incentives offered by competing owners and developers.?
Although investment transactions in the Polish office property market in 2012 are not likely to exceed the volumes noted in a very active 2011, a total of EUR 241 million worth of deals have already been completed during the first half of the year, with some major deals to be finalized later this year including the purchase of Warsaw Financial Center by Allianz/Tristan Capital, and the sale of International Business Center to DEKA.
Supply chasing demand in Warsaw
With 280,000 sq m of new office space to be completed in 2012, Warsaw comes as one of the most active European cities in office development, after Moscow, Paris and Vienna and before Central London, outpacing other CEE capitals, Prague and Budapest. Warsaw office stock totals ca. 3.7 million sq m, most of it located in City Centre, Mokotów, Aleje Jerozolimskie and Okecie. 11 new buildings were completed in the first half of 2012, offering a combined 93,000 sq m, with Poleczki Business Park by UBM / CA Immo and Mokotow Nova by Ghelamco being the largest. As much as 298,000 sq m has been taken up during the same period. The biggest office projects under construction include the Warsaw Spire, Gdanski Business Centre and Konstruktorska Business Centre. One of the most dynamically developing areas is Wola, with a number of new office schemes. It will also benefit from the second metro line, currently under construction.
Krakow attracting BPO and IT investors
Due to its competitive advantages, including well educated labour force, lower cost of living compared to Warsaw, and a good business climate, Krakow has become one of the most appreciated locations for BPO investors, including Motorola, IBM, UBS, Shell and a number of other major players. Modern office stock in Krakow now stands at around 565,000 sq m. While just 12,100 sq m has been delivered in the first half of 2012, almost 63,000 sq m is currently under construction, with 28,000 sq m scheduled for delivery still in 2012. The largest projects under construction include Quattro Business Park on Bora Komorowskiego Street, Bonarka 4 Business on Kamienskiego Street and Enterprise Park on Na Dolach Street.
Office development booming in Wroclaw
A quality business environment makes Wrocław the destination of choice for many Polish and international investors, creating a strong demand for office space. Total modern office stock reached over 425,000 sq m at the end of the first half of 2012. The growing popularity of the city has attracted large developers such as Skanska, Ghelamco or SwedeCenter. With developers striving to meet the strong demand from occupiers, completions are expected to exceed 100,000 sq m in 2012, 22,300 sq m of that delivered in H1. The most important project of 2012 so far was Green Towers I at Strzegomska Street, with other large projects currently under construction including Green Towers II, Green Day at Szczytnicka Street and Aquarius Business House at Swobodna Street. The current vacancy rate of 5% is one of the lowest in the country.
Local developers dominating the Tri-City office market
The existing modern office stock in the Tri-City amounts to 348,000 sq m, with around 65% of that located in Gdansk. Local Polish investors like Allcon Investment, Grupa Inwestycyjna Hossa, Torus and TPS dominate the market. The most important office projects completed in the first half of 2012 are BCB Business Park B1 and the second phase of Garnizon.biz. Currently, there is approx. 87,000 sq m of modern office space under construction in the Tri-City, with the largest projects including Olivia Business Centre and Alchemia ? both on Grunwaldzka Street.
Poznan attractive for BPO and manufacturers
Poznan is a favourable business location thanks to its long trade tradition, quality universities and excellent transportation infrastructure. Important tenants in the city include Allegro, Franklin Templeton, Carlsberg and Man Star Truck. Modern office stock amounts to 250,000 sq m, with nearly 60,000 sq m currently under construction. Pixel on Grunwaldzka Street and Malta House on Arcybiskupa Baraniaka Street are the largest projects.
Katowice wants to attract international occupiers
So far, Katowice has been a business hub mainly for domestic Polish companies. However, city authorities have announced a consistent development strategy and intend to start a number of public investments to enhance the positioning of the city. The total modern office stock in Katowice is 270,000 sq m. Apart from that, much of the available supply is located in buildings dating from before 1990, offering lower quality space. Currently, there are six projects under construction in Katowice, with a total space of 38,800 sq m, including Katowickie Centrum Biznesu or GPP Business Park.
Supply dominates in Lodz
With around 261,000 sq m of existing office stock, Lodz is currently one of the most actively developing cities in Poland, with an impressive 71,500 sq m under construction. The biggest office projects currently being developed are Aurus by Echo Investment, Green Horizon I by Skanska and University Business Park II by GTC. With the vacancy rate at 19% and a large amount of office space being constructed, no new developments seem feasible in the immediate future, even despite a relatively strong demand from multinational companies.
Due to its location in the north-west corner of Poland, close to the German border and the sea-side, Szczecin has a great potential for business development, although not yet exploited. The office supply comprises mostly B and C-class buildings, with modern office stock of 109,000 sq m at the moment. Another 80,000 sq m is currently under construction, with the most important schemes including Brama Portowa by SwedeCenter, Piastow Office Center by Real Capital or Hanza Tower by JW Construction.
Lublin emerges as a new business hub in eastern Poland, with well-educated workforce combined with relatively high unemployment and improving infrastructure creating a good potential for the city to grow. Modern office stock totals circa 111,000 sq m, with the vacancy rate of just 4%. 2012 has seen no completions so far, however, 25,900 sq m is currently under construction.
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