The region’s favourable image and numerous infrastructural investments are important factors on demand for modern office space. Companies from the business services sector remain the main engine for the office market’s development, summarised advisory firm JLL on the situation of the Tri-City office market.
“Demand for offices in the Tri-City continues to be strong. After a very good result in 2014, totalling 66,500 sqm in gross terms, 2015 saw all-time high demand volumes – more than 107,000 sqm. In H1 2016 around 37,000 sqm was leased in the Tri-City, with over a dozen deals for more than 1,000 sqm,” said Karol Patynowski, Associate Director, Tenant Representation, JLL.
A distinctive feature of the Tri-City is its talent pool with a good command of niche foreign languages (including Norwegian, Swedish, Finnish and Danish). This, along with recent improvements to its transport infrastructure, has further enhanced the region’s image as an attractive location for the business services sector.
“Tri-City is the fourth largest SSC/BPO location in the country, after Kraków, Warsaw and Wrocław. According to ABSL, there are 16,900 specialists working in the region’s business services sector. The growth of the business services sector not only develops the labor market but also contributes to the development of the Tri-City office market,” explained Karol Patynowski.
Companies from the industry continue to expand as they obtain new clients and projects – they increase the scope of services by introducing increasingly advanced processes and employing new specialists. As a result, business services centres extend their lease agreements, sign new deals and by selecting new space generate the further growth of office markets especially outside Warsaw. A similar trend can be observed in the Tri-City – 56 percent of office demand within the region was generated by companies from the business services sector in H1 2016.
Over the last two decades the Tri-City area has been transformed into an important and rapidly growing office location. Since 2008 the amount of office space in the Tri-City has almost tripled (from around 230,000 sqm by the end of 2008 to around 630,000 sqm by the end of June 2016). This means that the Tri-City is the fourth largest market in Poland in terms of size after Warsaw, Kraków and Wrocław. Gdańsk is the main office centre of the metropolitan area offering 450,000 sqm of modern space available in office clusters in the north (Oliwa, Wrzeszcz) and south-west (near the airport and W-Z route). Office supply in Gdynia amounts to nearly 147,000 sqm, the majority of which is in the centre and southern part of the city (the rapidly developing region of Łużycka). Sopot continues to maintain its tourist character offering 33,000 sqm of office space.
Currently, there is approximately 132,100 sqm of modern office space under construction in the Tri-City area. This illustrates the strong developer confidence in the region. JLL estimates that modern office stock in the Tri-City will increase to around 800,000 sqm by the end of 2018.
“The Tri-City offers a number of leasing options for small and medium space requirements. However, the choice of immediately available office modules of more than 5,000 sqm is limited. This means that occupiers looking for larger offices have to start their search in advance and be open to considering projects that are either under construction or planned”, says Karol Patynowski.
In total, the Tri-City offers 84,900 sqm of available office space across 52 developments, which equates to a vacancy rate of 13.5 percent. Prime rents currently stand at €12.75-13.5 / sqm / month.
“The market conditions will most likely continue to be tenant-favourable throughout the whole of 2016 and 2017, mainly due to the growing office offer in projects either under construction or planned,” added Karol Patynowski.
“The scale of the Tri-City market and the interesting range of modern office buildings is attracting the attention of investors. This is illustrated by this year’s sale and acquisition transactions of Opera Office, Allcon@park, Neptun Office Center and phase II of Alchemia,” said Rafał Kosoń, Associate Director, Office Investment at JLL.