Could do better

A lot of vacant space, only the odd modest deal and few new office buildings: that's the generally gloomy picture of the office market in Poland's provincial cities, and according to agents, there's not much hope of an imminent improvement

Tri-city

Prices going down, vacancy going up

Anna Grzywaczewska

Ober-Haus

Real Estate Company

One notable development is that in each of the three cities there are an increasing number of small multi-functional properties, which often contain office space. There's around 58,000 sqm of modern office stock in Gdynia, the best of which is in the 13,300 sqm Alfa Plaza Business Centre and the 9,300 sqm Hossa, as well as the slightly older Baltic Business Centre with 14,000 sqm and Chipolbrok - Investment with 4,900 sqm, both of which are also of a very high standard. Vacancy levels in these buildings are relatively low and vary from 5 to 10 per cent, and rents range from USD 10-16 per sqm, plus a USD 2 service charge. Lower class buildings such as the 6,500 sqm Rudzki building and Morska Centrum, with 4,900 sqm, are approximately sixty per cent leased, and rents here range from USD 10 to 15 per sqm; leases in these buildings involve 150- 300 sqm. In Gdansk, there's about 36,000 sqm of office space, in buildings such as Allcon with 4,000 sqm, which is 75 per cent leased and Centromor with 8,000 sqm, 80 per cent of which is leased. Rents in modern office buildings, of which around 60-70 per cent is leased, range from USD 9 to 15, with a USD 3-4 service charge. In spite of the plummeting rents, older office buildings remain vacant. The 10,000 sqm Centrum Biznesu Zieleniak is 65 per cent leased at PLN 46 per sqm, while the refurbished Sadowa Park is struggling to find tenants, though it offers low rents. Vigo with 7,000 sqm and the 3,500 sqm Company House building, which was built between 2000-2002, has been sold to various tenants for USD 550-700 per sqm.

Poznan

Lots of cheap space

Malgorzata Gaul

CB Richard Ellis

There's been quite a significant increase in class A and B+ space over the last few months: for instance: 12,000 sqm at the class A Centrum Biurowe Globis, 11,000 sqm at Delta, 10,000 sqm in the second phase of the PGK (Poznanska Grupa Kapitalowa) building and approximately 4,000 sqm of class B space at Stary Browar. In contrast to supply, demand is weak and most leases are signed for around 40-60 sqm. A 90 sqm deal will more than satisfy the average agent. Deals for anything between 500 and 2,000 sqm are only rarely struck, which is why there is a 26-7 per cent vacancy rate in the city. The gap between supply and demand has led to a further fall in rents. The current base rates for class A and B+ space are around EUR 15-16 per sqm, plus a EUR 3-4 service charge but most leases are signed for a little over EUR 10 per sqm. I'm not entirely sure what the prospects are for an increase in demand, as firms in Poznan tend to construct build-to-suit properties and rarely seek to lease.

Kraków

IT firms lead the way

Monika Suldeck

Knight Frank

The 10,000 sqm GTC Galileo was launched this year and the new sections of Buma Square on ul. Wadowicka are opening gradually. Last January, a 4,000 sqm building was completed on ul. Bociana and another 4,000 sqm facility in the special economic zone outside the city, which is the only office building currently up for lease, is about to be launched. Construction on the Nowa Kamienica site in ul. Rakowicka began last September. Negotiations start at EUR 14-17 per sqm for the highest-class buildings, while for class B properties it's about EUR 9-13. Most leases are signed for 100-300 sqm and usually by local IT companies. The latest trend is for them to move to larger headquarters, hence an increased interest in 500 sqm units.

Wroclaw

Renovating kamienicas

Jacek Wróblewski

Jot-Be Agencja Nieruchomosci

Just over 5,000 sqm of new office space has emerged in Wroclaw this year, 3,000 of which is located in a newly renovated kamienica called Platon. Priced at EUR 14 per sqm, the building does not provide parking space but is situated right at the heart of the city. Two new buildings have been added to the Wroclaw Business Park office complex, which consists of 12 office buildings with a total of 20,000 sqm. The new complexes, of 2,600 sqm each, have both been leased by Siemens. The vacancy rate is about 20-30 per cent of all available space, but older buildings tend to be fully leased. Rents in class A and B+ buildings, the vast majority of which are renovated kamienicas, are fixed at around EUR 12 per sqm. There are a number of schemes, such as the NCC complex near Galeria Dominikanska, which have been put on hold due to the oversupplied market.