The office market in Wrocław noticed record high new supply and a historically high level of demand. And the pace of development of the capital city of Lower Silesia will also continue to be high. By the end of 2018, office stock in Wrocław is expected to exceed 1 million sqm, according to latest report prepared by real estate advisor Savills.
According to the “Market in Minutes – Wrocław offices 2017” report prepared by real estate advisor Savills, 139,100 sqm of office space was delivered in Wrocław in 2016. The result is 57 percent above the 2015 level and more than double the amount seen in 2014. The largest project completed last year was the first phase of Business Garden Wrocław (36,600 sqm).
According to Savills forecasts, the office market in Wrocław will continue to grow dynamically. Some 86,200 sqm of new supply is planned for 2017, with another 86,800 sqm in the pipeline for 2018 and over 219,100 sqm of office space planned for 2019. There are 20 office projects under construction across the city with the largest: Sagittarius Business House (25,100 sqm), Retro Office House (20,700 sqm) and BZ WBK Robotnicza (17,000 sqm). The largest planned projects are: Business Garden Wrocław II (40,000 sqm), Pin Park I and Pin Park II (35,300 sqm) and Cuprum Square (33,400 sqm).
The level of demand in 2016 when 124,500 sqm was leased, was the highest in the history of the office market in Wrocław. Ca. 40 percent of the total letting activity took the form of pre-lease agreements, signed for office space in projects that are under construction or for which construction works have yet to start. The largest lease agreements in 2016 include a lease renewal/renegotiation of Credit Suisse in Grunwaldzki Center (10,800 sqm) and a pre-lease agreement of BNY MELLON in Sagittarius Business House (10,500 sqm).
Prime headline rents for the office space in Wrocław are now in the range of €13.00 – 15.00 per sqm/month and have decreased slightly in comparison to the previous year. Landlords are offering incentives in order to attract tenants, thus effective rents are ca. 15 – 20 percent lower than headline rents.
The vacancy rate in Wrocław at the end of 2016 stood at 12.5 percent, which translates into 106,300 sqm of office space ready to be leased. The vacancy rate in 2016 increased by 4.9 pp in comparison to 2015. The vacancy rate is to remain rather stable. We expect the gap in vacancy rates between A and B class buildings to widen, in the favour of A Class projects.
Wrocław is the third largest office market in Poland, after Warsaw and Kraków. However, office space per capita is higher in Wrocław than in Kraków. The capital city of Lower Silesia is one of the most business-friendly environments in Poland. Wrocław has a strong position especially in the new technology and business services sectors. The city also has the highest level of English proficiency in Poland, thus many companies are willing to locate their R&D centres there.
“Wrocław is a very important location on the office map of Poland,” said Tomasz Buras, Head of Poland, Savills. “With a large and growing supply of modern office space and a well-educated and highly qualified workforce, the city keeps attracting new companies. Wrocław was chosen by global IT companies such as: HP, IBM, Luxoft, Nokia and Opera Software.”