After three quarters, tenants in Krakow demonstrated the highest activity among regional cities. By the end of September, the demand for office space rental reached 179,000 square meters. The activity of developers remains limited, and the office resources increased only by 14,000 square meters from January to September. The growing demand and limited supply translate into a decrease in the vacancy rate to 18.9%.
At the end of September 2024, the office resources of Krakow amounted to 1.82 million square meters, constituting 14% of the total area in Poland.
In the third quarter, no new facility was commissioned, and since the beginning of 2024, the market has expanded by over 14,000 square meters. Developers’ activity on ongoing projects does not foresee a significant improvement in supply results in the near future. Currently, 35,000 square meters are under construction, of which 44% will be put into use in 2025. The largest projects underway are Wita Stwosza (19,460 square meters, Echo Investment) and a building being developed for Elte GPS own needs (10,500 square meters).
“Unlike the supply side results, the tenants’ demand for office space shows a growing trend. At the end of September, the transaction volume of 179,000 square meters represented a demand increase of 47% since the beginning of the year compared to the same period in 2023. It should be added that this was the highest result among regional cities,” comments Monika Sułdecka-Karaś, partner, regional director at Knight Frank.
The result achieved between January and September represented 35% of the total transaction volume in the regions. In the third quarter of 2024 alone, the demand for office space rental in the capital of Lesser Poland was more than twice as large as in the same period last year. If the demand level continues to hold in the fourth quarter, the annual result may be comparable to that achieved in 2019, which was a record year in this respect.
In the leasing agreements structure in the third quarter, renegotiations dominated, constituting 60% of the volume of Krakow transactions. The share of new contracts decreased, reaching 36% of the volume. Still, few tenants decide to increase the occupied area, accounting for 3% of the signed agreements. The remaining 1% represented rental for own needs.
“Strong demand for office space and limited new supply have led to a decrease in the vacancy rate in Krakow. In the third quarter of 2024, the index was 18.9% and decreased for the first time in five quarters. Compared to the previous quarter, the rate decreased by 1.3 pp.,” adds Michał Kusy, junior consultant in the market research department at Knight Frank.
Asking rents in modern office buildings in Krakow in the third quarter of 2024 remained stable compared to the previous quarter and usually range from 10 to 16 EUR / square meter / month, although in the most prestigious buildings they may exceed this value. The average operating costs in the third quarter of 2024 also remained stable, ranging from 16 to 29 PLN / square meters / month.
Source: https://managerplus.pl/krakowski-rynek-biurowy-rosnacy-popyt-ograniczona-podaz-i-spadajacy-wspolczynnik-pustostanow-79364
