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For investors to want to create new jobs here, we need something more than Wawel and the Main Square.
2011 was not a match for the year before in the Krakow office market. However, it ended on a strong note. On December 28, an occupancy permit was issued for the second building in the Quattro Business Park. On that day, Krakow recorded a major addition of office space: 11,800 m2, representing one quarter of all such space commissioned in the last 12 months. In 2011, Krakow gained almost 40,000 m2 of modern offices.
„The result is no match to 2010. Two years ago, 60,000 m2 of modern offices were commissioned in Krakow, and in 2009, even more: 90,000 m2. However, if the number of projects and the interest of tenants is confronted with what is happening in the global economy, the situation is much better than could be expected. What is important is the number of initiated projects, as it bodes well for the future” – says Jarosław Czerski of Instytut Analiz MRN.
We are not going to catch up to Warsaw, as it is a metropolitan market. However, Krakow is the clear leader of the regional market of Poland, and its rival, Wrocław, stands no chance of coming head to head with it in the next 2 years.
We are building an office power
„Krakow is still attracting developers and tenants, while the number of projects started forms grounds for optimism. In 2012, we can expect 50,000 m2 of new offices, and another 60,000 m2 in 2013. It makes no sense to project further into the future, as developers are reacting very flexibly today. Planning permits and even building permits obtained are no proof that the projects will be built. If there is demand for office space, new office buildings will appear. Krakow has huge potential, so we are happy about developers’ optimism and new tenants coming to Krakow or the present ones leasing more space” – says Jarosław Czerski, an analyst of the office market segment of Instytut Analiz MRN.
This optimism is justified by, for instance, the number of vacancies in Krakow office blocks. The MRN analyst assesses 2012 to be starting well, since only 9 per cent of office space is awaiting tenants. A year ago, this figure was 11 per cent. Developers are not building without tenants in sight. The second building of the Quattro Business, commissioned on December 28, 2011, will house offices of Bank Handlowy, the Medicover Medical Clinic and Apply Capnor.
The 2nd quarter of 2012 will see the start of construction on an architecturally-interesting office development called the Orange Office Park, designed by Illard Architects (Wojciech Witek, Łukasz Kozina). A final building permit was issued for this development in early January. Its first stage (13,000 m2) at the junction of Klimeckiego and Powstańców Wielkopolskich St. is planned in the 3rd quarter of 2013. The whole development is to offer approx. 25,000 m2.
„We have 70 per cent of the retail space leased, but are still talking to office tenants, who include both domestic clients, like the administration of large banks which are also interested in retail bank branches, and multinationals providing BPO (Business Process Outsourcing) services” - claims Piotr Miklaszewski, Director of MC Real Property, a Krakow-based company representing the investor of the new project. The latter is the Dutch-invested East-West Development Office sp. z o.o. of Krakow. It has been active in the Polish market since 2007, with a track-record of a shopping centre in Kielce, a residential estate near Poznań and a detached house estate near Krakow.
In January, a major player on the office development market, the Buma Group, is to begin building the next stage of the Quattro Business Park in Bora-Komorowsklego St. „In parallel, we are finalising the construction of the Green Office in Czerwone Maki St., and we plan to commission Building C with 10,000 m2 in August 2012. We are building it and negotiating with future tenants” - we are told by Dorota Turska, a marketing officer of the Buma Group.
„The end is in sight on the construction of the MIX office block in Jasnogórska St. Excon and Fronton in Kamieńskiego St. will soon be commissioned. This year we expect the commissioning of the roughly 15,000 m2 Business Enterprise and the 8,000 m2 Bonarka4Business development. The more distant future holds another stage of the Quattro Business Park and Building D of B4B, the MARR Agency office block, the aforementioned Orange Office Park and finally, “Szkieletor” (the abandoned skyscraper). I think that this project will finally get completed and the skyline of the city will be cleared of this rather questionable highlight. If it is completed, Krakow may gain even 40,000 m2 of offices in one place. We will not be a match on Warsaw, as it is a metropolitan market. On the regional Polish market, however, Krakow is a clear leader” – judges Jarosław Czerski.
Currently Krakow can proudly report almost 540,000 m2 of modern office space. All signs show that this figure will exceed 600,000 m2 in 2013. The next contender in the regional league tables, Wrocław, offers approximately 350,000 m2. Regardless of large projects under construction there, it will not catch up to Krakow in the next 3 years.
Apart from offices of class A and B+, there are also older office buildings whose space is hard to count, as the eldest are being demolished or their function changes (e.g. an office building in Wielopole St. has been upgraded into upscale apartments).
Statistics completely exclude office space in old tenements and detached houses, where legal firms, financial and advertising agencies, travel offices etc. like to locate. Hence it can safely be said that Krakow certainly has about a million meters square used as offices.
„This is due to the huge potential of the labour market. Companies that need educated staff like to locate in Krakow. Their decisions are supported by the increasing supply of office space. In addition, Krakow is an interesting and easily accessible city with many strengths, but let us not fall into self-admiration. For investors to want to come and create new jobs here, we need something more than the Wawel Castle and the Main Square. We need good municipal management and many auxiliary investment projects. Krakow authorities could use more determination in increasing the city’s appeal” – says Jarosław Czerski of Instytut Analiz Monitor Rynku Nieruchomości (Property Market Monitor – Analysis Institute).
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