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Kraków will offer 1 million sq m of office space for lease in 2017

Konrad Dziewoński10 years ago, the BUMA Group, one of the first developer companies in the Małopolska region was  already providing its employees with access to a fitness zone, a swimming pool and other amenities. The company’s President – Konrad Dziewoński – explains why quality of office space is now so important and talks about the challenges to be met by the market in Kraków as well as the BUMA Group’s operations and plans for the future.

 

How would you rate the office market in Kraków?

Konrad Dziewoński: 2016, as in previous years, was characterized by stable growth in office space volume delivered to market (149,300 sq m in 2016) as well as demand for space. Furthermore, the vacancy rate has been stable for a number of years. Client interest remains buoyant due to the expansion of companies operating in the city. Their success in turn encourages other companies to establish operations in the city.

Kraków_Wawel_JLL

In 2017, Kraków will offer 1 million sq m of office space for lease. Are we looking at market saturation?

Konrad Dziewoński: No. In my opinion, the saturation threshold has not yet been reached and it is hard to predict when this might happen. During the last 10 years, I have heard on numerous occasions that the situation on the market will change. However, over the last decade, growth in the Kraków market has continued apace even in 2008. This depends not only on situation in Poland. For example, as a result of the conflict in Ukraine two companies relocated to Kraków.

What is your forecast for the next few years?

Konrad Dziewoński: As for the next three years, I expect the positive trend in demand for space to continue. In the long term, I fear that the dynamics might drop because of the labour market. Companies from the business services sector have selected Kraków as a base for their development because of access to qualified, linguistically proficient employees. However, we already recognize the high increase in salaries, as well as an influx of specialists from outside of Poland, mainly from Belarus and Ukraine.

Will Kraków, as an academic city with several universities and over 20 colleges, manage to cope with problems related to the availability of human potential?

Konrad Dziewoński: Of course it will! I am thinking about the possible challenges in the next 3-5 years. Kraków has rich cultural and educational assets - universities in Kraków are as well regarded as those in Warsaw. Currently, there are 160,000 students in Kraków and 30,000-50,000 graduates each year.

Students_JLL

I suppose that there is no lack of job offers for foreigners in Kraków?

Konrad Dziewoński: As I mentioned before, there is an abundance of people from Ukraine and Belarus. These people are linguistically proficient, they are programmers and provide services for back-office processes, accounting and HR. More and more companies from the BPO/SSC sector are now taking over the role of organizers of services centres in cheaper locations.

One might hear that working in a BPO is an easy job that does not require specialist qualifications…

Konrad Dziewoński: Beginning with simpler processes, employees from the business services sector, especially in the IT segment, have started to take part in laboratory studies and the testing of new software. Gradually, they have started to create solutions and generate business processes on their own. These people have received higher education and have great potential for development. They are now starting to play important roles in company centres abroad.

Is the quality of office space important while selecting the office in Kraków?

Konrad Dziewoński: A lot has changed. In the past, the density was much higher and not much focus was put on amenities for employees. Today, this aspect is of the utmost importance due to the fact that the competition on the labor market is much higher.

The BUMA Group was  a pioneer in developing amenities for employees in office spaces.

Konrad Dziewoński: The current office of BUMA Group was delivered to market over 12 years ago. At the time, our employees could use a swimming pool or the gym which were both located in the building. Furthermore, we also had a post office and banking facilities in the building. 10 years ago, staying fit was not as popular as it is today and, as a result, the fitness zone operator had a difficult task to fulfill. Fortunately, the healthy lifestyle culture has become popular and today, easy access to such amenities is a “must-have”. This is the success behind Buma Square Business Park whose attractiveness does not depend solely on its location .This is illustrated by the park's 100% occupancy rate.

BUMA is the biggest developer with Polish capital operating on the Kraków market. How do you plan to compete with  major players such as Echo, Skanska or Ghelamco?

Konrad Dziewoński: Thanks to our familiarity with the market, we are able to compete with the giants. We are competing successfully and our business proposition has been selected by a wide range of clients and large corporations worldwide, who are attracted by the number and quality of services provided by our company.

DOT Office
DOT Office, Kraków

As a group, do you provide other services apart from developer activities?

Konrad Dziewoński: During the political changes in Poland, we started as a wholesale chain offering building materials. The chain was sold to a foreign investor. With this capital, we were able to launch a developer company – a foreign term on the Polish real estate market at the time, especially due to the fact that apartments were developed by collectives. We also led the way in single-family residential developments. However, we never had our own construction employees – we always used sub-contractors. A lot of our first investments were developed in the form of steel structures, which we patented by producing pre-casts in our own factory. At the end of the 1990s, having primarily been involved in the residential market, we decided to enter the office market. By using existing resources in the form of engineering staff supervizing the construction sites, we established general contractorship operations, which currently employs approx. 50 specialists and is involved in 10 developments for the BUMA Group as well as our competitors in the residential and office market. Another business is the production of facades and aluminium windows, employing over 100 specialists. The team developed elevation projects for a large bioenergy plant in Stockholm, a University in Luxembourg, the office of Credit Agricole in Paris, as well as The Tides and WTW building in Warsaw. Another business is the management of office structures ,and the administration of residential neighborhoods developed by BUMA. Today, technical installations play an important role in the proper functioning and use of buildings. We have a separate facility management unit providing technical services for office and residential objects.

What plans for the future?

Konrad Dziewoński: In Kraków, we are currently working on three major investments – another phase of DOT Office, Wadowicka 3 and Tertium Business Park at 34 Lublańska Street. Furthermore, we have plans for more office projects. In all our developments, we plan to implement advanced technological solutions that meet all the criteria for building certifications – there is no other way to provide attractive offers for tenants. At the same time, we are also developing residential investments.

Tertium 
Tetrium Business Park rendering

Thank you for the conversation.

Anna Wasilewska-Dąbek

Anna Wasilewska-Dąbek
Communication Manager Poland&CEE, JLL

The interview was conducted by Anna Wasilewska-Dąbek, Editor of Bazabiur.pl. Anna is an expert in B2B communication, CRM and digital marketing. She gained her experience working for corporations such as DHL and King Sturge both in Poland and abroad for over 15 years. Anna works at JLL for 6 years.