Łódź – the Office Eldorado in the centre of Poland

Adding date: 31.10.2018 | Poland

Today, Lodz is in the third stage of the development of its office space. It is safe to say that the current development works relate mainly to newly-built office buildings and are some of the largest projects in Poland. 

The development of the Łódź real estate market is divided into at least three stages. At the beginning of the 21st century, tenants did not have much choice and mainly used the renovated buildings of former production plants and factories. Łódź is famous for its revitalization projects and the rental of office space in post-industrial spaces. It was a natural method of development and provided an optimum use of the potential of the real estate market at that time. The process of revitalizing post-industrial buildings became one of the trends, which initiated the process of searching for modern office space. 

The years 2005–2012 mark the second stage of development. According to the data provided by the BSSIndex.com platform, forty BPO/SSC/R&D projects were realised in Lodz during that period, whose presence influenced the rapid development of the office infrastructure. It was the sector of modern business services (BSS) that became the driving force for the development of offices and the creation of new and attractive jobs in Lodz. The emergence of international and domestic developers resulted in the growth of the city's infrastructure, creating three major office districts. Each of them was located in the close, and over time – the immediate neighbourhood of universities and transport hubs.

At the beginning of 2018, Cushman& Wakefield prepared a report describing the real estate market in Lodz, which stated that the dynamics of the office market development in the years 2011–2014 remained stable, with an average growth rate of 15,000 sq. m per year. From the beginning of 2015, a significant revival of the market could be observed, which in 2015–2016 grew by about 35,000 sq m per annum.

Today, Lodz is in the third stage of the development of its office space, and thus it is increasingly opening up and reacting to the needs of developers and office tenants. It is safe to say that the current development works relate mainly to newly-built office buildings and are some of the largest projects in Poland.

As Marcin Włodarczyk, Regional Director at Colliers International, states: – With the intense development of the office market in Lodz currently being observed and the high growth rate of the supply of buildings, apart from the New Centre of Lodz and the axis formed along Piłsudskiego and Mickiewicza Streets (from the Piłsudskiego/Rydza-Śmigłego junction area to the Mickiewicza/Żeromskiego junction area), there is a very clear division into two new hubs, that is (1) the Mickiewicza/Piotrkowska crossroads area (the former Red Tower, Orion, CBL, Synergia, Łódź1 buildings and the newly-built Hi Piotrkowska, Teal, Sepia buildings), and (2) the Piłsudskiego/ Rydza-Śmigłego crossroads area (the so-called Crossroads of the Marshals) with slightly older buildings. Together with the New Centre of Lodz, they clearly form three office hubs, still belonging to the broadly understood centre of Lodz.

The fact that Lodz is now an impressive construction site is also mentioned by Igor Yankilevich, an Associate at Savills: – At the moment Lodz has approx. 90,000 sq m of modern office space under construction. The enormous potential of the city is demonstrated by the decisions of the biggest developers, who have recently initiated projects in Lodz. Undoubtedly, one of the most attractive business areas in the city is the New Centre of Lodz (NCL), where Skanska Property Poland has implemented the Nowa Fabryczna project in the immediate vicinity of the new railway station. Still under construction, the City Gate (Skanska Property Poland) is located in this area, and HB Reavis and Ghelamco Poland have already acquired land in this area, where further projects can be expected in the future.

The last decade has shown that in the developing region of Central and Eastern Europe, cities with well-organized office districts and a good supply of human resources have attracted the most attention from foreign investors in the BSS sector. Thanks to the concentration of business and the possibility of choosing development areas with attractive locations and low costs, many cities in Eastern European countries, from Lithuania through Poland, the Czech Republic, Romania and Bulgaria all the way through to Serbia, have attracted more and more new developers from abroad. Lodz was highly successful at exploiting its potential in the first two stages of development, and thanks to new projects, the third stage is looking very good and very ambitious, to say the least. The next 12 to 18 months will see a period of intense construction work, as a result of which a dozen or so new and modern facilities will be erected, complementing the Lodz office districts.

It should be noted that in addition to the commercial projects, Lodz itself is undergoing major changes. A wideranging revitalization process has already begun in the city centre. This involves not only the renovation and modernization of tenement houses, streets, and the important monuments of the city, but also comprehensive actions aimed at improving the quality of life and creating favourable conditions for business and creative activity. This is the largest revitalization process in Poland so far. The inner city centre has been divided into 20 projects, eight of which have been selected as top priority  – projects with EU co-financing have already begun there. 

The interest in Poland, as a location for BPO/SSC operational centres, remains at a high level. Lodz is a big academic centre, and at the same time it is constantly expanding its office space while maintaining the optimum costs of business operations. These factors make it invariably an interesting destination for many BSS projects in the region of Central and Eastern Europe.

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