Improving connectivity, high quality labour market, strong local economy and wide selection of office space are key factors attracting investors, especially from Nordic countries, to the Tri-City area.
Employment in the sector has increased by about 30% since the beginning of 2012
Tri-City, Warsaw, 5 December, 2013 – Jones Lang LaSalle publishes the Tri-City Office Market Report 2013, a comprehensive and wide-ranging overview of the city and its investment attractiveness, considering key factors for the business services investors – infrastructure, labour market, business climate and office market. The research was prepared in cooperation with the Association of Business Service Leaders in Poland (ABSL), Invest in Pomerania and Hays Poland.
The Tri-City (Gdańsk, Gdynia, Sopot) metropolitan area, home to more than 1.2 million people, is the leading economic hub in northern Poland, geared towards high technologies, business services, finance and IT. The region, in recent years, has been a magnet for business services sector investment because of the combination of developing infrastructure, strong local economy, talent pool, good business climate and a developed office market.
Improving transportation network and good connectivity
Mateusz Polkowski, Associate Director, Research and Consultancy, Jones Lang LaSalle, said: "The Tri-City metropolitan area is characterized by the excellent transport network including air routes. International airport in Gdańsk serves more than 50 destinations, also major European airline hubs. The large number of connections with German and Nordic cities, combined with access to a large talent pool and wide choice of office space makes Tri-City an attractive near-shoring location for serving international markets".
New under construction airport terminal in Gdynia will further improve flights selection. In addition, railway connections with Polish major cities are being improved e.g. modernisation of the E65 railway line, shortening travelling time from Gdynia to Warsaw to 3,5 hours.The Tri-City has an access to the A1 motorway and the expanding ring road. Also, seaports in Gdańsk and Gdynia are developing.
Business climate and high quality of living
Wojciech Tyborowski, Project Manager, Invest in Pomerania, commented: "Tri-City offers a selection of tools to attract and support investors. This includes e.g. the founding of The BPO Education Center - the first institution in Poland that aims exclusively at recruiting and training future employees of service centres. In addition, the Economics Faculty of the University of Gdańsk has launched a new course "Finance in companies", accredited by ACCA. In addition, the Gdańsk Scholarship Scheme - a unique mechanism provides financial assistance for training personnel of newly established businesses -has been introduced. What is also of great importance, is the good quality of life that Tri-City's metropolitan area has to offer. This is reflected in Gdynia and Gdansk's excellent results in surveys focusing on the quality of life in Polish cities.
Labour market – towards R&D services
The growth of the knowledge-based economy is very much dependent upon a constant inflow of graduates to the labour market, especially finance, language and IT graduates. Currently, there are approximately 7,000 graduate from a finance faculty and almost 1,000 from IT-related divisions in Tri-City (source: CSO). This large available pool of staff with higher education and specialist knowledge attracts centres with more advanced functions and processes, which are referred to as KPO (Knowledge Process Outsourcing) centres. Moreover, the Tri-City has substantial science and research potential, technical facilities and a good number of engineering specialists, which are all critical for the growth of R&D centres.
Marta Aserigadu, Delivery Manager, Hays Poland, commented: "The Tri-City, being one of the major academic centres in Poland, provides opportunities to source a pool of talent with a very good command of foreign languages. More importantly, in addition to fluency in the popular European languages, staff in Gdańsk, Gdynia and Sopot can also speak niche Scandinavian languages. The University of Gdańsk offers a wide range of language faculties, including Danish, Finnish, Swedish and Norwegian, which are still rare in Poland. This clear competitive advantage translates into a large pool of experienced candidates who possess a working knowledge of more than 20 foreign languages".
Business services sector in the Tri-City – employment rate 30% up since the beginning of 2012
Dariusz Bazeli, General Director of Geoban Polska, Leader of ABSL Regional Chapter in Tri-City, said: "The business services sector in the metropolis is growing rapidly, which is evidenced by the fact that one in every four service centres in the Tri-City started its activity between 2012 and 2013. Employment in the sector has increased by about 30% since the beginning of 2012. Taking into consideration the potential of the region, this trend is expected to continue in the near future, with growth being generated by both newcomers and companies already operating in the local market".
More than 40 investors (Bayer, Geoban, OIE Support, WNS Holding, Metsä Group, Nordea, Kemira, Thomson Reuters or Sony Pictures Entertainment, to name but a few) from 13 countries — mainly the USA (15) and the Nordic countries (10) — have established service centres in the Tri-City. Currently (2013), centres with foreign capital employ more than 10,000 people, which is the fourth highest number in Poland (after Krakow, Warsaw and Wroclaw). It should also be noted that one in five service centres with Nordic capital located in Poland are found in the Tri-City. The region specializes in IT and R&D services (over 65% of centres operating in the Tri-City), followed by financial and accounting processes. Services are provided in more than 30 languages.
Tri-City's office market – growth generated by business services
The Tri-City market is dynamic not only when newcomers from the business services sector are considered. Companies already established in the region, also appreciate the Tri-City and improve local employment rates. Potential tenants' interest is having a positive impact on the office market, which can fulfill the tenants' expectations in the area of location, availability and standard.
Stock and supply – new office locations and half a million sq m of office stock in 2014
At the beginning of November 2013, total office supply in the Tri-City amounted to 430,000 sq m, which makes the Tri-City the fourth largest office market (behind Warsaw, Kraków and Wrocław) in Poland. Gdańsk remains the largest office hub with a share of 62% in total Tri-City office supply, followed by Gdynia (30%) and Sopot (8%). At the end of October 2013, more than 71,000 sq m of office space was in construction stages across the Tri-City, 35% of which has been already secured by pre-lets.
A couple of office locations have started to emerge and have become core office destinations within the Tri-City region, e.g. Oliwa and Wrzeszcz and areas close to the airport in Gdańsk and Łużycka St. in Gdynia. Also, Gdynia's embankment is growing in importance with planned multifunction Gdynia Waterfront project.
Demand - tenant-favourable market
Q1-Q3 2013 seems to be a bit subdued in terms of demand, with an observed take-up of only 28,000 sq m. However, many transactions are still pending and may be closed till the end of 2013. The largest lease transactions signed this year include those by Geoban (2,800 sq m, Łużycka Office Park), Gdańskie Wydawnictwo Oświatowe (2,500 sq m, Alchemia) and Acxiom Poland (1,600 sq m in Garnizon.biz), just to name a few.
Vacancy rate up
The high level of construction activity and substantial completion volume have been influencing the vacancy rate in the Tri-City since the beginning of 2012. Since that time, the vacancy rate has increased from 7% to more than 12%.
In November 2013, the prime headline rents in the Tri-City stood at €12.25 to 13.50 / sq m / month.
Magdalena Reńska, Head of Tri-City Office, Jones Lang LaSalle, commented: "According to our analysis, office space stock in Tri-City will reach half a million sq m in 2014. A high level of developer activity and new products being delivered to the market in 2013-2014 will result in a 15% rise in the vacancy rate. At the same time, rents for prime locations will remain stable. What's worth noting is that the rental range has narrowed, down from €12-14 / sq m to €12,25-13,50 /sq m and will decrease further. This is of course good news for future tenants, whose negotiation position will become even stronger and who will have more interesting options to choose from. Additionally, incentive packages will continue to grow in importance. Already today, developers offer tenants rent free periods, complete fit-outs or additional relocation budget to convince companies to change their address. Factoring in this additional tenant inducement and developers' readiness to offer even more attractive incentives, effective rents might even be 15-20% lower than base rents".