After two years of declines witnessed in 2013 and 2014, construction and assembly output generated by the office construction segment is expected to grow to PLN 3.6 billion (€857 million), just a little lower than the PLN 3.8 billion (€905 million) record output of 2012. The office market is also expected to increase in 2016, as indicated by exceptionally robust data on building permits secured by investors in 2014.
PMR researchers expect that about 5.5 million sqm of office space will be added in 2015-2020 (including about 4 million sqm of modern office space in Warsaw and the main regional cities), according to PMR’s latest report entitled “Office buildings construction in Poland 2015-2020. Investments – Companies – Statistics – Forecasts – Prices”.
The office construction market in Poland has grown significantly only in the past 10 years, that is in the years following Poland’s accession to the EU, on the back of the rapid growth of the outsourcing industry in the country. There are more than 600 outsourcing centres in Poland which employ a total of 150,000 people, mostly in the country’s major cities with university-educated people.
“The further growth of the business services sector and, by the same token, the development of office construction sector, will be driven by numerous factors, including the evolution of the industry from simple practices to knowledge-based services and advanced technologies, the growth of the business services sector in second-tier regional cities, continued capital expenditure by companies which have already established a foothold in Polish market and the rising popularity of outsourcing among Polish companies,” Bartlomiej Sosna, PMR Head construction analyst and the author of the report, said, and added: “The continued growth of the office construction sector may have also been driven by the decision to extend the operation of the special economic zones until 2026 as not only production companies set up their operations in the zones (though they also establish small-sized offices side by side with production plants) – there are also investors from the outsourcing sector who operate in the zone as well”.
With eight office projects under construction, Echo Investment is the leader among developers operating in the office space sector in terms of the number of projects underway, according to the analysis of office projects underway and planned. Other major players in the office market are Skanska Property Poland and Vastint Poland, a member of the Ikea group. Leading architectural studios in terms of the number of office buildings underway or planned include: Kurylowicz & Associates, APA Wojciechowski and JEMS Architekci. Skanska, Erbud and Porr are market leaders in terms of the number of on-going general contracting projects involving construction of office space.
The average unit contract price is approximately PLN 4,200 (€1,000) per sqm of usable office space, according to PMR researchers’ analysis of contracts for construction of office buildings. It should be noted that the average contract price for public contracts is over 20 percent lower than average prices in office projects conducted by private investors. The highest unit contract prices of all contracts presented in the study was reported for the X2 Boutique Office Building in Warsaw – PLN 5,844 (€1,390) per sqm. A public project with the highest unit contract price of those presented in the report is the construction of the WFOSiGW head office in Lodz (PLN 5,699 or €1,357 per sqm). The highest-priced projects included mostly Class A office building projects with green certificates or projects for which developers are seeking such certificates. These projects also include two or three underground floors. Those two factors have the strongest bearing on office construction costs.
Warsaw has the largest number of office projects underway as there are about 50 investment projects in progress in the city at the moment. However, office markets of Krakow or Wroclaw are also expanding rapidly. There were 15 and 10 projects underway in, respectively, Krakow and Wroclaw, in March 2015, according to the PMR Investments database. The Tri-City has about 10 office projects in progress. Warsaw is also the leader in terms of the number of projects in the planning or preparation stages. The PMR Investments database presented data on 65 office projects defined as planned or in preparation as at March 2015.
Warsaw’s Chopin Airport City complex is currently considered to be the largest project in the making. The investor Przedsiebiorstwo Panstwowe Porty Lotnicze plans to build Poland’s first ever ‘airport city’ on a 22.5 ha site in the area of the Warsaw Chopin Airport within 10 years. The project involves the construction of 26 office buildings with auxiliary amenities (165,000 sqm of total office space).
