The Wrocław office market is enjoying an unprecedented boom, says real estate advisory firm Cresa Poland in its report “Occupier Economics: Office Market in Wrocław in H1 2018”.
In mid-2018, Wrocław’s office stock reached 1.01 million sqm, which represented a 16% increase on the same period last year. Eight new office buildings providing a total of 104,000 sqm were delivered to the market between January and June 2018. The largest office completions included Echo Investment’s 24,900 sqm Sagittarius, which was delivered in Q2, followed BZ WBK’s 17,000 sqm office building and Echo Investment’s 13,900 sqm West Link.
Office take-up hit 36,000 sqm in Q2 2108, but the overall transaction volume for the first half of the year amounted to 60,000 sqm. New leases accounted for 80% of the leasing activity, one of the highest rates in Poland, which is evidence of the Wrocław market’s rapid growth. The largest transactions were the 17,000 sqm owner-occupier deal by BZ WBK (now Santander Bank Polska) and the 10,000 sqm lease signed by Santander Consumer Bank S.A. at Business Garden I. The Santander Group accounted for nearly half of the city’s leasing volume. Other major transactions included a confidential tenant’s 4,700 sqm lease at the Nowy Targ office building and Eltron’s 4,100 sqm owner-occupier deal at Eltron HQ.
“Wrocław plays a key role on the map of BPO/SSC/R&D/IT centres. There is a strong preference for occupiers to locate in existing office buildings or schemes at an advanced stage of construction. Although Wrocław is a tenant-led market, it is facing an undersupply of suitable office space available for immediate lease. Tenants who can shelve plans to relocate or open a new office until 2019, when new office projects with large volumes of vacant space will come onto the market, will have a wider choice of options,” said Michał Grabikowski, Head of the Wrocław Office, Cresa Poland.
Absorption in H1 2018 amounted to 91,000 sqm, representing a 65% rise on the same period last year, which was largely attributed to the Santander Group’s strong activity. Wrocław’s vacancy rate stood at 9.7% at the end of Q2 2018, up by 1.3 p.p. compared to last year and up by 0.4% on the average for the last three years.
Asking rents remained relatively flat in Q2 2018, standing at EUR 13-16/sqm/month in Class A office buildings in Wrocław’s city centre with the median at EUR 14.5, and at EUR 12-14.5/sqm/month in other locations.