Katowice office market on tenants and developers radar

International advisory company JLL presents a summary of the key data and trends on the Katowice office market after Q1 2014. Dynamic growth, high construction activity, strong tenant demand, especially from the business services sector, and one of the lowest vacancy rates in Poland are the key features of the office market in Katowice, according to the research paper.

© JLL; summary statistics of Katowice office market
© JLL; summary statistics of Katowice office market

Total modern office stock in Katowice is estimated at 317 800 sq. meters. A further 59 000 sq. meters will come onto the market in 2014, a third of which has already been pre-let . This ranks Katowice fifth in respect to the existing office supply (behind Warsaw, Kraków, Wrocław, and the Tri-City), and fourth in terms of pipeline office provision in 2014 (after Warsaw, Kraków and Wrocław).

Q1 2014 saw the completion of one office building in the city i.e. the first phase of the A4 Business Park by Echo Investment, with 8 700 sq. meters of office space fully let. In Q2, another 15 300 sq. meters of new supply is set to be delivered to the market, half of which is already pre-leased. However, the majority of office provision under construction will be delivered in H2 2014 (43 600 sq. meters), including 12 700 sq. meters in Silesia Star I (LC Corp), and 10 700 sq. meters in Silesia Business Park I (Skanska), both of which are 50% let.

Rafał Oprocha, head of Kraków and Katowice office, JLL, said: “Katowice and its wider area has in recent years become home to numerous global corporations including Capgemini, IBM, ING, Unilever, Ericsson, Oracle or PwC, which have all opened their business services centers here. The rationale behind this situation is that the location is prime, it has a well-developed infrastructure and a strong academic potential that creates a significant talent pool. Stable and competitive rents, that are slightly below headline rents found in other major office locations in Poland like Warsaw, Wrocław, Poznań or Kraków, are important as well. The above combination enables a flow of new investment projects into the city, and resulted in the high tenant demand in 2013”.

In 2013, Katowice office market registered its best year, in terms of demand, since 2010.The gross take-up totalling 60,700 sq m represented a 25% increase y-o-y, was registered. Importantly, the net take-up of 53,900 sq m was up 36% on 2013. 51% of all signed leases were pre-lets.

Q1 2014 saw office lease transactions for 13,100 sq m, with 49% being new agreements.

The vacancy rate in Katowice has been steadily declining since Q2 2010 when a peak of 18,3% was recorded. Currently it stands at only 5,6% of modern office stock, which corresponds to 17,700 sq. meters of modern office stock being vacant. Only Kraków currently has a lower vacancy rate.

“The regular decline in the vacancy rate not only proves that Katowice has continued to attract new tenants, but also that the companies already operating in the city are developing, and therefore need more office space for further business expansion” – Rafał Oprocha added.

Prime headline rents in Katowice range between EUR 12,50 and 14,00/sq.m/month.

Download the full version of the report here.