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The Krakow office property market is big enough to efficiently meet the needs of a growing service centre, which the city is gradually turning into. However, it seems easy to identify the major players: leading developers and expanding tenants. Does this mean that there is no room for new investors here?
Dominant players
The largest slice of the pie representing modern office space in Krakow belongs to the Buma Group, which has so far built over 70,000 m2 of offices in total. The same amount is under construction or within short-term plans. The company's position is mainly due to its long history of activity in this regional capital of Małopolska and a significant experience in this field. Buma Group buildings include the Quatt.ro Business Park, the Green Office and the Buma Square Business Park. The latter, constructed 5 years ago, houses over 20,000 m2 of office space. Companies with offices in the building in Wadowicka St. include Motorola, Electrolux and Sabre.
The Quattro Business Park in Bora Komorowskiego St. will be a cluster of four buildings with the total space of almost 50,000 m2. So far, one of them has been finished and has been leased almost entirely by Capgemini.
While the Buma Group is a company with local roots, active primarily in Krakow, the activities of Global Trade Centre span 10 CEE countries, where it has built over 0.5 million m2 of office space. In Krakow, GTC’s track record comprises a cluster of office blocks in Armii Krajowej St. (Galileo, Newton and Edison with Pascal still under construction) and the Kazimierz Office Centre. The total floor area of GTC office blocks in Krakow (including Pascal) exceeds 50,000 m2. The buildings in Armii Krajowej St. house the offices of, inter alia, KPMG, Deloitte, IBM and Lotos.
A significant proportion of office space in Krakow belongs to Krakowski Park Technologiczny, the company managing the Special Economic Zone.
Buildings within the Zone are eligible for tax breaks and other benefits aimed in particular at supporting the growth of innovative economy.
Krakowski Park Technologiczny offers office space in several locations, primarily in the Kraków Business Park in Zabierzów, but also in buildings at Jana Pawła II Ave. (Nautilus Aquarius, Avia and Inkubator Technologiczny).
Ambitious innovators
However, the involvement of large companies in the Krakow office space market does not mean there is no room left for new developers. A perfect example is the Vinci office building completed by Dyskret, a company specialising in security systems. This building, in Opolska St., offers almost 20,000 m2 of space.
What makes it stand out is no compromise in the security technologies used and the highest technical standard. The designers paid attention to specific requirements companies from all over the world set for office space. The backup power supply from an electricity generator can guarantee even several days of uninterrupted operation, while parts of floors with increased load-bearing capacity have been designed with a view to setting up secret offices and archives. Vinci, as the result of the personal involvement of the investors, was recognised in the Budowa Roku 2011 (Project of the Year 2011) competition and won the 1st prize in the public building category. Its main tenants include Orlen and KPG.
Prospective Krakow
The success of the Vinci office building proves that there is also room in Krakow for new developers able to propose an innovative solution meeting tenants' needs. However, market demand is not sufficient for everyone to succeed. The report "Office Buildings in Krakow. 2010 Summary" drawn up by Krakowski Rynek Nieruchomości, indicates that the growing demand will be satisfied mainly by the projects already under construction or at least with documentation necessary to start works. This is the case of e.g. projects by the Buma Group (Quattro Business Park).
The growth of the Krakow market is not fast enough to expect any significant musical chairs among the major players. However, this can change due to Krakow's rising position in global rankings of investment attractiveness. The one by Global Services and Tholons, in which the city was ranked at the best location for outsourcing, was taken into account in the annual World Investment Report 2011 published by the UN Conference for Trade and Development (UNCTAD), contributing to a high evaluation of the investment opportunities in Poland. The coming years may see an acceleration of investment processes in the city, as a result of which the tenants’ demand for modern office space will rise.
Investing in quality
So what are the contemporary trends on the local office market? Firstly, investors are betting on design and building quality. To attract tenants, buildings must meet varied corporate requirements, and this is why the buildings being constructed in Krakow are increasingly advanced. Secondly, this is related to the fashion, coming to the city, for "green offices" in which environmentally-friendly solutions are employed. The BREEAM certification is already pursued by the Quattro Business Park, but other buildings can be expected to follow suit. Krakow cannot compete with Warsaw in quantity terms, so the emphasis here is on the quality of buildings, which, together with the outstanding academic environment and highly educated staff give the city a great position on the global investment map.
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