Katowice office market – supply and demand in balance

Katowice, 22 December 2014 Experts from the international advisory company JLL have summarized the most important data and trends on the office market in Katowice.

The investment attractiveness of Katowice results from factors such as: strategic location, well-developed infrastructure and access to qualified staff. The combination of these assets fosters the inflow of new investments to the city, including the business services sector. According to ABSL, there are 64 service centres operating in the Katowice Agglomeration. Furthermore, ABSL analyses show that in the agglomeration, the sector employs 15,000 workers, two-thirds of which are employed in centres with foreign capital. Giants such as Capgemini, IBM, ING, Unilever, Ericsson, Oracle and PwC have centres located here.

With an office stock amounting to 337,000 sq m, Katowice is the fifth largest regional market in Poland after Warsaw, Kraków, Wrocław and the Tri-City. Developers have been quick to notice growing tenant interest in the city and responded this year with a robust volume of new supply. In Q1–Q3 26,900 sq m of modern office space was delivered in Katowice; however, we expect an additional 33 000 sq m to come onto the market by the end of 2014. 2014's total supply will hit ca. 60,000 sq m. The biggest new office projects to have entered the office market this year are: GPP Business Park II&III (15,000 sq m), Silesia Star I (12,700 sq m) or Silesia Business Park I (10,700 sq m).

Mateusz Polkowski, Associate Director, Research & Consultancy, JLL, said: “Our research shows that the office market in Katowice grew by about 55% over the last five years. Developers were quick to respond to the huge demand for office space generated by an increasing number of tenants, primarily from business service sector companies. 2011 was a breakthrough year in this matter, as take-up volumes were almost double of those seen in 2010. This trend was confirmed by annual increases of 25%-30% in the following years.”

As for Q1–Q3 2014, gross take-up stood at over 37,400 sq m. One of the largest transactions in Q1-Q3 were: a deal by UPC for 6,500 sq m in Green Park and TPG Katowice, a subsidiary of Teleperformance Germany, for 2,300 sq m in GPP Business Park III.

Rafał Oprocha, Head of Kraków and Katowice Office, JLL, added: “The Katowice office market gained momentum a couple of years ago, when it became an important destination for the business services sector. This sector continues to be a major driving force behind the commissioning of new office projects and is also a strong factor in the growth of demand. Business services centres with foreign capital have a 32% share in total occupied stock in the city. Among the most notable recent entries that illustrate the sector's continuing influence on Katowice's market are: IBM in A4 Business Park and PwC in Silesia Business Park. Furthermore, from the beginning of the year until the end of September, business services centres with foreign capital signed lease agreements for approx. 15,500 sq m in Katowice, accounting for 41.4% of overall office space take-up in the city at that time”.

The Katowice office market is beginning to mature. Supply and demand in balance have generated a vacancy rate of 9.8% in Q3 2014. However, as several large agreements signed in 2010 will expire at the turn of this year, we expect an acceleration of vacancy rates in older buildings.

Prime headline rents in Katowice remain stable and currently range between €12.5 and €13.75 / sq m / month.

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