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A good time to consolidate offices in Katowice

Katowice’s office stock has increased by more than 8 percent over the year, exceeding 531,000 sqm at the end of September, as revealed in Cresa’s “Occupier Economics: Office Market in Katowice Q1-Q3 2019”.

“Katowice’s office market is witnessing healthy occupier activity as vacant space is available not only in standalone class A office buildings, but also in top-quality mixed-use complexes. As a result, companies operating out of several locations throughout the city have opportunities to consolidate operations in a single location. In addition, the capital of Silesia remains attractive for new companies which are attracted by investment and infrastructure projects underway in Katowice. It also benefits from its strategic location at the crossroads of major transportation routes and a robust public transport network within the entire metropolitan area. Another advantage making the city an attractive business location is the availability of skilled labour,” says Elżbieta Golik, Advisor, Office Department, Cresa Poland.

The third quarter of 2019 witnessed the completion of a full refurbishment of the 1,500 sqm Porcelanowa 60 building located in a remote area outside the centre of Katowice. New office supply amounted to just under 10,000 sqm in the year to date, down by 21,500 sqm on the same period last year.

The leasing volume totalled more than 60,000 sqm in the first three quarters of 2019, which represented an almost 50 percent increase on the five-year average of 41,500 sqm. New leases accounted for more than half of that total (56 percent) while renegotiations and expansions made up 38 percent and 6 percent, respectively.

The largest office deals of the first nine months of 2019 in Katowice included the renegotiation of IBM’s lease for 8,650 sqm in A4 Business Park I, the renegotiation of Unilever’s lease for 7,300 sqm in Nowe Katowickie Centrum Biznesu and the Perform Group’s 6,400 sqm lease in Face2Face Business Campus.

At the end of Q3 2019, the city’s vacancy rate stood at 7.7 percent, down by 3.5 pp year-on-year, but up by 0.3 pp on the second quarter of the year.

“Office absorption turned negative in the third quarter of 2019. In the year to date, the volume of occupied space increased by nearly 15,000 sqm, marking an almost twofold decrease on the same period last year. This year is likely to be weaker in terms of absorption compared to 57,300 sqm posted in 2018. Going forward, absorption is expected to pick up due to the cyclical nature of the market supply,” says Bolesław Kołodziejczyk, PhD, Head of Research & Advisory, Cresa Poland.

Rental rates range between EUR 13.50–14.50/sqm/month in Katowice’s higher grade office buildings, with lower grade buildings commanding rents of EUR 9–12/sqm/month.

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