Since the beginning of the year, office take-up hit 78,000 sq m. Developers answer demand from tenants – 155,000 sq m is currently under construction in Lower Silesia's capital city.
Warsaw, 1 December 2015 – Experts from international advisory firm JLL summarize the situation on the office market in Wrocław at the end of Q3 2015.
Katarzyna Krokosińska, Senior Consultant, Office Agency and Tenant Representation Agency at JLL, responsible for the market in Wrocław, comments: “The robust economic development of Wrocław is underpinned by the strong performance of the business services sector in the city. Wrocław is the third largest modern business services hub in Poland. According to ABSL, business services centres with foreign capital employ approx. 23,700 specialists in Wrocław. Furthermore, the city is internationally recognized by Tholons in its Top 100 Outsourcing Destinations 2015, coming in 62nd on the worldwide list. The development of structures within companies already active in Wrocław as well as new entrants to the city's market are generating demand for new office space and encouraging high developer activity.”
Strong take-up
After 2014 when a record-breaking 95,400 sq m of lease agreements were signed, the office market in Wrocław continues to register high demand for office space. Between Q1 and Q3 2015, 78,000 sq m were leased (a 36% year-on-year increase) with forecasts for the end of 2015 and 2016 remaining bullish.
The most significant transactions in Q1-Q3 2015 include: a 7,000 sq m new deal by Unit4 in Centrum Biurowe Globis; a 6,800 sq m pre-let by a confidential tenant in Dominikański; a 5,500 sq m renewal by Nokia in Bema Plaza and a 5,000 sq m new deal by 3M in Dubois 41.
Developers meeting demand
“Total office stock in Wrocław is now 663,400 sq m, meaning the city occupies third position in terms of market size in Poland, after Warsaw and Kraków. Booming demand is being matched by substantial developer activity. At the end of Q3 2015, 155,000 sq m of modern office space was under construction”, adds Katarzyna Krokosińska.
Between Q1 and Q3 2015, 65,500 sq m of office space was delivered to the market. By the end of the year, the volume may be as much as 86,000 sq m. The largest developments that entered the market in 2015 were Dominikański (35,600 sq m), West Gate (16,000 sq m) and Dubois 41 (6,800 sq m).
Vacancy rate and rent
As a result of sound demand and sufficient supply, the vacancy rate in Wrocław fell slightly in comparison to 2014; at the moment it stands at 8.8% (10.5% in 2014). Nonetheless, the rate is expected to increase as the extensive pipeline of more than 100,000 sq m comes to market in 2016.
Prime headline rents in Wrocław remained stable throughout 2015 and currently range from €14 to €14.5 / sq m / month, while average headline rents from €12 to €13 / sq m / month.
Wrocław Office market -the numbers
| Summary | 2014 | Q1–Q3 2015 | 12-month outlook |
|---|---|---|---|
| Gross Take-up (sq m) | 95 400 | 78 000 | |
| Net Take-up* | 74 500 | 59 900 | |
| Vacancy (sq m) | 62 700 | 58 100 | |
| Vacancy rate (%) | 10,5 | 8,8 | |
| Completions (sq m) | 58 700 | 65 500 | |
| Under construction (sq m) | 162 800 | 155 000 (as of Q3) | |
| Prime Rent (euro / sq m / month) | 14-14,5 | 14-14,5 |
Source: JLL, Q3 2015
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JLL is a leader in the field of office lease and tenant representation advisory in Wrocław. Between Q1 and Q3 JLL participated in office lease transactions totalling 26 400 sq m, earning the biggest agent market share in Wrocław – 44% as of the end of Q3.