First quarter summary

The first quarter of 2010 has brought a clear sign of the office market recovery as some important lease agreements were signed in Katowice. About 1 900 sq. m were taken by PZU in Atrium, 2 200 sq. m goes to PwC for its local office and the Shared Service Center in newly developed Katowice Business Point and 5 849 sq.m will be occupied by PKP Cargo in Reinhold Center. It was one of the biggest rental agreements in Poland during Q1 2010. The Reinhold’s buildings is already 81% leased and the company has announced to launch a next phase of the complex.

The foregoing numbers can allow to look more positively at the office market in Katowice. However, in spite of relatively low vacancy rate (8%), next months will bring increase in this amount as new office developments are to be delivered. A total stock of new office space in 2010 will depend on a delivery date of the “B” building of Francuska Office Center – last statements said it would be concluded in Q4 2010 or Q1 2011 which is relative to the market needs. Aside from this, the new supply should add to the market not less than 36 000 sq. m this year.

Headline rents stood at the level of EUR 10 –12/sq.m/month in B/B+ class office buildings and EUR 13 –15/sq.m/month in A-class buildings. A supply and vacancy rate, which grow significantly, cause many incentives for tenants, like rent-free periods, and decreasing effective rents to levels of EUR 10 – 12/sq.m/month in top quality projects.

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