Insight into office market by JLL

JLL has released a report Destination Silesia concerning the potential of Katowice and vovodeship’s commercial sector. Part of the publication is dedicated to the office market.

In the third quarter of 2015, there were approximately 58 200 sq. meters of modern office space under construction in Katowice, of which less than 20 000 sq. meters have been already pre-let. The vacancy rate stood at the level of 14,5 percent. The total office space in the city amounted to 381 800 sq. meters. 16 100 sq. meters of new offices were delivered to the market during the first three quarters of 2015. Gross take-up totaled 52 100 sq. meters during that period and already exceeded the total gross take-up of 2014 (48 300 sq. meters).

As the report says, the modern office market in the Upper Silesia agglomeration is mainly served by assets located in Katowice, which is the region’s leading administrative and business center. Additionally, a number of modern office facilities have been built in other cities in the voivodeship (e.g. Częstochowa) jointly offering 140 000 sq. meters.

Analysts of JLL claim: „To date major demand for office space in regional cities has been generated by the rapidly developing BPO sector. International firms target Katowice and other key cities, as they offer a well-educated and skilled labour force. The market is driven by both expanding companies, as well as newcomers entering the market. The majority of them have had successful operations in Poland and so decides to increase their and carry out more complex services in Poland, which positively affects the office and labour market. The office market in Katowice is very absorptive and in our opinion has very positive development perspectives.”

In terms of total office stock, Katowice is now ranked fifth among Polish regional cities after Kraków, Wrocław, Tri-City and Poznań. Taking into account Upper Silesia’s economic and demographic potential, the fifth position in the office sector is certainly below what is possible, according to JLL. If the office space under construction is taken into consideration, Katowice is placed at fourth position after Kraków, Wrocław and Tri-City.

With Katowice as the major office hub in Upper Silesia, an investment zone along the „DTŚ” inner road in the center of the city is gradually emerging as an office downtown. Central location, convenient access and availability of development land enable JLL to assume that the financial center of the agglomeration will be located there in the future.

The average size of A class office buildings in Katowice varies between 7 500 and 12 000 sq. meters. The vast majority of office developments are being built on a speculative basis by experienced developers such as Skanska, Echo Investment, LC Corp, GPP and Opal.