Global real estate services firm Cushman & Wakefield summarised the Łódź office market at year-end 2018. The last four years witnessed robust occupier activity on the Łódź office market, which pushed the city’s vacancy rate down to 8.7 percent. Due to a limited choice of options, firms searching for offices sized below 1,000 sqm have to opt for buildings completed before 2009. This is expected to improve in 2019 following the completions of several office projects that will provide more than 77,000 sqm in total.
Łódź’s total office stock is nearly 470,000 sqm. Five office projects delivered last year provided 33,900 sqm (-54 percent y/y). The largest office completions included Ogrodowa Office (24,700 sqm), TME office building (5,500 sqm) and Sepia Office (2,300 sqm). According to Cushman & Wakefield’s analysts, this year’s new supply is expected to hit more than 77,000 sqm delivered across the first phase of the Brama Miasta complex (26,200 sqm), Imagine (17,200 sqm) and building one of Monopolis (8,600 sqm). Office projects that are anticipated to break ground in Łódź in 2019 include Ghelamco’s P22, Echo Investment’s placemaking project in Tymienieckiego Street and HB Reavis’s project in the New Centre of Łódź.
In 2018, total leasing activity in Łódź hit 56,100 sqm (-4 percent y/y). The largest transactions included Orange’s 4,250 sqm lease at Ogrodowa Office, GFT Poland’s 4,100 sqm lease at Sterlinga Business Center and Accenture’s 4,000 sqm at University Business Park A.
“Thanks to the availability of plots, private investments and city projects such as the New Centre of Łódź or the regeneration project, Łódź is transforming into a modern business hub. The city’s business services sector already employs more than 20,000 people and local demand is becoming a key driver of the Łódź office market’s growth. Development activity is picking up following the absorption of the new office space delivered to the market in the last two years. The largest concentration of the development pipeline is in prime locations which are easily accessible by public transport or via the motorway such as the junction of Śmigłego-Rydza and Piłsudskiego avenues, the section of Piłsudskiego Avenue between Piotrkowska and Kilińskiego streets, and the New Centre of Łódź. In addition, developers are also planning projects in secondary locations such as Textorial Park II and Fuzja in Tymienieckiego Street. These factors will continue to underpin the boom on the Łódź office market in the coming years, thereby helping the city strengthen its position by the year,” says Zuzanna Krech, Senior Negotiator, Office Agency, Cushman & Wakefield.
Prime office rents in central locations averaged EUR 13.50/sqm/month in 2019.