Kraków - ASPIRE

Research &
Forecast Report
Kraków | Office Market
March 2015
Kraków Overview
Office market summary
At the end of 2014, the total supply of modern office space in
Kraków amounted to 617,400 m2. During the year twelve
office schemes totalling 111,000 m2 were delivered to the
market. The biggest new investments included Kapelanka 42
(29,900 m2, Skanska), Avia (14,000 m2, GD&K Group),
Enterprise Park C (13,500 m2, Avestus) and Quattro Business
Park D (12,800 m2, Grupa BUMA). Over half of the newly
completed supply was located in the southern parts of the city.
Office stock evolution (m2)
Investments planned for delivery include phase I of Opolska
Business Park (19,200 m2), Aleja Pokoju 5 (13,000 m2),
K1 (13,000 m2, renovation), Bonarka 4 Business F
(10,000 m2), Bonarka 4 Business E (10,000 m2, already
completed in January 2015) and Quattro Business Park Five
(8,700 m2).
Selected projects under construction
Developer
GLA (m 2)
Average floorplate (m 2)
Opolska Business
Park I
Echo Investment
19,200
1,690
Axis
Skanska Propety
Poland
18,000
2,365
K1
Pramerica RE
13,000
450-2,000
Aleja Pokoju 5
Grupa BUMA
13,000
1,450
MIX Jasnogórska 9
MIX Biura
12,000
2,500
TriGranit
10,000
1,200
Grupa BUMA
8,700
1,250
DOT Office I
Grupa BUMA
7,200
1,650
Enterprise Park D
Avestus RE
5,800
1,800-1,900
Building
Bonarka 4 Business
Building F
Quattro Business Park
- Five
Source: Colliers International, March 2015.
Source: Colliers International, March 2015.
Activity among developers remains strong as over 140,000 m2
are currently under construction. Although the majority of
space is being built outside the city centre (90,500 m2),
growing activity in the central zone can be observed
(49,200 m2). In 2015, the market will increase by 94,200 m2.
1
Leasing activity in Kraków amounted to 117,200 m2, which
constituted nearly 30% of the total activity recorded in
regional markets in 2014. Companies in the modern business
services sector entered into agreements for 88,000 m2 (75% of
total demand in the city). The largest deals signed during the
period included HSBC (12,500 m2, Kapelanka 42), Cisco
(5,600 m2, Enterprise Park), SABMiller (4,400 m2, Kapelanka
42) and AON Hewitt (4,300 m2, Diamante Plaza).
Throughout the year, Kraków recorded the lowest vacancy rate
among the eight major regional markets in Poland. Despite the
record growth in stock, the vacancy rate recorded only a
marginal increase due to strong absorption levels. At the end
of December 2014, the vacancy rate stood at 5.6% (against
Research & Forecast Report | Q1 2015 | Office | Colliers International in association with ASPIRE
4.4% in the same period of 2013), which translated into
34,400 m2 of available space. Currently, the occupancy rate in
buildings under construction planned for 2015 is estimated at
12%.
Europe’s top two cities (2007-2015)
New BPO/SSC entrants in 2014
ALK Abello
Lundbeck
Allegro
Pontoon Solutions
Fedex
SABMiller
Getinge
Skipjaq
Grid Dynamics
Solar Winds
IAG
Source: ASPIRE, March 2015.
Source: ASPIRE, March 2015.
During the discussed period, base rents for A-class office
space in existing buildings varied from €13.5 to
€15.5/m2/month, whereas in B-class offices rates were in the
range €10-13/m2/month. Although base rents in projects under
construction are at levels similar to those in existing buildings,
developers are offering more favourable conditions in terms of
additional incentives (including a rent-free period and fit-out
budget). Therefore, tenants may be able to profit from more
competitive effective rates.
With 100+ IT and Business Services companies employing
almost 40,000 people already present ASPIRE predicts that
there will be a 20% growth in headcount in Kraków in 2015.
This forecast is based on two trends.
ASPIRE Headcount Tracker
Rental rates (€/m2 per month)
Class A
13.5-15.5
Class B
10-13
9
10
11
12
13
14
15
16
Source: ASPIRE, March 2015.
Source: Colliers International, March 2015.
New entrants: 5 year trend (1995-2014)
Modern business services sector
Kraków’s reputation for technology and business services
continues to grow apace. The city again takes top place among
cities in Europe in the latest Tholons rankings, Top 100
Outsourcing Destinations 2015. Globally, Kraków is eclipsed
only by the big Indian cities, such as Bangalore and Chennai,
or Manila in the Philippines. In Europe it continues to move
away from its competitors, with Dublin, Europe’s second most
successful city, slipping down the rankings. Notwithstanding
the much heralded success of the business services industry in
Poland, other than Kraków only Warsaw among Polish cities
finds itself in the Top 50.
Source: ASPIRE, March 2015.
2
Research & Forecast Report | Q1 2015 | Office | Colliers International in association with ASPIRE
First, new entrants: half of the companies now located in
Kraków have entered the market in the last 5 years, with 12
new centres established in 2014 alone. Rather than a
slowdown in number of new entrants, the critical mass of
companies present in Kraków is attracting more new
companies to set up in the city as the ecosystem to support the
industry continues to develop. Early indications in 2015 are
that this trend is set to continue.
How Kraków centres grow
Second, the historical growth and development plans of
existing companies. The ASPIRE Headcount Tracker shows
that companies two years on the market have an average size
of 200 people and that this number doubles in the next 3-4
years.
Examples can be seen in the recent announcements by Cisco
Systems that the company will add a Network Operation
Centre to its existing facility in Kraków and Brown Brothers
Harriman, who having initially planned to grow to about 300
employees announced plans to reach almost 1,000 by the end
of 2015. Both companies entered the market in 2012.
Source: ASPIRE, March 2015.
The key to Kraków’s continued growth is the expanding
capability in the market, which is encouraging companies to
move ever higher value processes to their operations in the
city.
3
Research & Forecast Report | Q1 2015 | Office | Colliers International in association with ASPIRE
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Research and Consultancy Services
Dominika Jędrak
Director
+48 666 819 242
dominika.jedrak@colliers.com
Ewa Grudzień
Analyst
+48 666 819 264
ewa.grudzien@colliers.com
Office Agency | Tenant Representation
Robert Z. Karniewski
Partner | Director of Regional Markets
+48 604 121 371
robert.karniewski@colliers.com
bn income in 2013
Anna Galicka-Bieda
139
mln m2
under management
15,800
employees
Regional Director | Kraków
+48 666 819 206
anna.galicka-bieda@colliers.com
Marlena Kłaput
Regional Coordinator | Kraków
+48 882 014 545
marlena.klaput@colliers.com
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