Office Space Market in Krakow

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The modern office market in Krakow has been developing dynamically since the late 90’s, but the greatest increase of leasehold stock of A- and B-class was recorded between the years 2000 and 2002. After that period developers’ activity has considerably fallen, however forecasts for the year 2007 are much more optimistic.
Currently the total office leasehold stock is estimated by a company Knight Frank at the level of approximately 113,000 sq m. Given the historical character of architecture in the city centre, Krakow has no “business centre” typical for other cities. New office schemes are situated on the outskirts and beyond the centre, in locations of high accessibility.
The new office supply is estimated to reach some 7,500 sq m in 2005, while in 2006 another 17,600 sq m will be delivered to the market. The schemes that are currently under construction are situated in the non-central locations, except for the office scheme on Kielecka Street.
Office Space in KrakowThe city centre stock, situated in the vicinity of the Old Town, comes in majoraty from the period, historic buildings that have been refurbished and which incorporate some 30,000 sq m of leasehold stock. The prestigious location and high specification of those buildings attracts companies from the professional services and consulting sectors as well as the legal advisory firms.

The area of greatest concentration of office accommodation in the fringe of city centre is the vicinity of Lubicz Street, Mogilskie and Grzegorzeckie Roundabouts. Located in this area are office buildings such as: Centrum Biurowe Lubicz (11,800 sq m), Nowa Kamienica (3,500 sq m), Cracovia Business Centre (13,200 sq m), Lobos (1,000 sq m) and Pliva (2,700 sq m). Moreover between the years 2006 and 2007 the ECE’s Galeria Krakowska mixed-use scheme will increase the stock by another 10,000 sq m of office space.

The office stock located in the non-central location accounts for approximately 66% of all the stock, and is concentrated in the following locations:
  • Eastwards within the Czyzyny Special Economic Zone (e.g. the Copernicus building with some 4,300 sq. m of office accommodation, headquarters of ComArch, Linde Gaz and Pfaffenhain).
  • West-northwards where office accommodation concentrates in the area of Ofiar Katynia Roundabout and Armii Krajowej Street. The office stock includes Euromarket (10,000 sq. m), Galileo (10,000 sq. m), Zasada Centrum (2,900 sq. m) and Brama Bobrowiecka (2,600 sq m), the latter one currently under construction.
  • West-southwards along Wadowicka Street, where stages of the Buma Square (15,800 sq m) complex are being developed and along Milkowskiego Street the Colosseum office building (2,300 sq m). Moreover within the “Pychowice” area headquarters of Motorola Polska and Delphi are located.
The buoyant economic situation in the country during 2004 was also reflected on the Krakow’s real estate market, what was indicated by the growth of demand and decrease in vacancy rates. In the years 2002 – 2003 level of demand for A-and B-class office buildings ranged between 12,000 – 13,000 sq m p.a., while in 2004 demand has peaked reaching 16,000 sq m. In the first six months of 2005 absorption remained on the upward path and reached the level of 8,500 sq m. Demand came in the majority from the IT, banking and consulting sector companies.
The vacancy rate in the past couple of months has been systematically falling. In the early 2004 a significant fall in the vacancy levels has been recorded. In the first half of 2005 approximately 12% of modern office space in Krakow stood vacant, while in the beginning of 2004 the rate reached 25%.
Asking rents in A-class office buildings in Krakow range from €13-14/sq m/month, in the B-class buildings - €9-12/sq m/month. In the refurbished historic buildings the rental levels vary between €10-13/sq m/month and depend on the standard of finishes.
(an excerpt from Knight Frank’s report commissioned by the Municipality of Krakow)
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