The size of office space market of a given city determines its potential and prestige, at the same time attracting more investors form various fields. That is why each agglomeration which aims at dynamic development should take care to balance the demand for office space with its real supply. Wrocław has been functioning as "the city of office buildings" but does it deserve the title?
Advantages of Wrocław
- Wrocław is above all a city with a great business and social potential. But it was not until 2005 that large international companies started to locate their offices in the city. It caused a quick increase in demand for modern office spaces, which, in effect, in 2007 brought the beginning of Wrocław official office space market. Remarkably dynamic development in recent years naturally generated increased demand for office space. – Our company sees the potential of Wrocław and thus creates here green buildings with the highest standards. Thanks to years of experience on the property market we invest in places where our buildings not only make profits but also can help to develop local enterprises and thus the whole city – says Magdalena Holak, Leasing Negotiator Skanska Property Poland.
- Wrocław, as the city of meetings, has been attracting investors from many fields such as finances and new technologies for years now. International organizations locate their businesses in the city more and more frequently. – The city has an amazingly positive energy. It's become the place where people involved in business, science and culture meet. It is also one of the oldest and most beautiful cities in Poland. The fact that Skanska office buildings can co-create the modern aspect of the city is a great source of pride and satisfaction for us – says Magdalena Holak.
- Advantageous geographical location between Warszawa, Berlin and Prague and proximity of several special economic zones. – Geographical location, well-functioning public administration and presence of major international companies in the region – these are the main factors influencing the attractiveness of Wrocław from the point of view of GTC – explains Jacek Wachowicz, Member of the Board and Rental sales Director at GTC SA.
- Well educated staff. – An excellent educational base is a great advantage of Wrocław. The number of students in the city is constantly growing, and thus is growing the number of well educated young employees who know foreign languages and attract investors form abroad – explains Magdalena Holak. – Location which provides a large number of candidates with various foreign languages is the most important criterion for us – adds Dariusz Sus, Chief Operations Officer EY Global Services (Poland).
- Friendly investment climate created by Wrocław authorities. At the end of 2010 Wrocław received the title of: "the most investment and investor friendly city and Mayor" awarded by American Chamber of Commerce in Poland. For years the actions of the city authorities have served as an example how to promote the city and meet the investors' expectations (the authorities launch many programmes – exemption from property tax, reduction in the rates of rent, crating and supporting business environment institutions, etc. which are to help investors and entrepreneurs). Wrocław occupies high positions in international investment rankings (for example, Warsaw Business Journal ranking names Wrocław as one of the places with lowest investment risk).
Supply and demand
At present in Wrocław the level of demand is much higher than supply, which means that the authorities do not use the city's whole potential. According to a DTZ report "Property Times – Office – Regional cities Poland – H1 2010 – Positive prospects" the whole supply of modern office space at the end of 2010 in Wrocław amounted to 370 000 square meters. More and more investors want to build office buildings even in the outskirts and around the city. However, driveways and pubic transport do not favour such investments - many tram tracks are closed at the moment. – Even though Wrocław was not untouched by the results of the stagnation, local commercial property market is one of the most attractive in the country. The rate of office vacancy in the city is the lowest among all larger cities in Poland (4.3%). Our own analyses and predictions of consulting companies in the first quarter of 2011 indicate that demand for office property in Wrocław will be increasing and at the same time supply will be decreasing – says Jacek Wachowicz, Member of the Board and Rental sales Director at GTC SA.
Rental rates in Wrocław remained at the same level throughout the year and start from 36PLN/sq.m.(+ metered charges) in less attractive places, through 70PLN/sq.m. near the city centre, to 90PLN/sq.m. (+ maintenance fees) in new modern high-rises at a busy street. Thus the price depends on the location (proximity to the city centre and transport links), the standard of interiors (state of the art solutions improving work conditions: air conditioning, proper light, ecological materials), and the way fees are calculated. – Quotations are made individually, depending on the size of the property, and tenant's costs of adaptation. We never try to raise costs artificially. We provide our tenants with high quality office space at reasonable, as for the local conditions, rent costs – adds Jacek Wachowicz from GTC SA. Because of the deficiencies on the office property market in Wrocław in 2011 we should expect higher rental rates. Many companies already book space in places yet to be built.
Office market analysis over the recent years
2008 - definitely a crucial year for the office market in Wrocław. According estimations made by Knight Frank, an international consulting company in the real estate industry, at that time 105 thousand square meters of new office space appeared on the market. 14 projects were commissioned to use, most of the space in the buildings had been rented before the works were completed. Because of high demand Wrocław had one of the lowest vacancy rates - in the first quarter it indicated 8 percent, in the fourth - 6 percent. The quality also remained at a high level - mainly thanks to international, major investors, who decided to build class A buildings in the city. Modern office space could be rented for 14-17 Euro/sq.m. net. The highest asking rates concerned space in Times building at Kazimierza Wielkiego Street. The greatest investments on the office property market in 2008 include: Bema Plaza, investor Ghelamco, surface 23 thousand square meters; Grunwaldzki Center – buildings B and C, investor Skanska Property Poland, surface 16.3 thousand square meters; Globis, investor Globe Trade Centre, surface 12.5 thousand square meters; West Forum – first stage, investor Archicom, surface 10 thousand square meters; Wrocławski Park Biznesu II – first and second stage, investor Devko, surface 10 thousand square meters; Milenium Tower II, investor Descont, surface 7 thousand square meters. According to the data collected by Knight Frank, 257 thousand square meters of modern office space was available in Wrocław in the fourth quarter of 2008, which makes the city number one among largest regional office markets.
2009 - in the first half of 2009 office market slightly slowed down. In the second quarter lower rental costs and introduction of certain incentives for tenants brought a small increase in the number of lease transactions. Unfortunately, the downturn caused suspension of the realization of most planned high office buildings and residential projects. Sky Tower is a great example - the investor decided to lower the tower by 78 meters. According to Knight Frank the rate of vacancy amounted to 8.5 percent. The company estimated that in 2009 about 46 thousand square meters of office space were commissioned to use. Buildings commissioned: Silver Forum, investor Archicom, surface 15.5 thousand square meters; Grunwaldzki Center – second stage, investor Skanska Property Poland, surface 14.4 thousand square meters.; Centrum Orląt, investor Lukas Bank, surface 13.34 thousand square meters.
2010 - in the first half of the year there were no buildings to be commissioned to use. At the same time increasing demand was noted. According to Knight Frank in Wrocław in 2010 the vacancy rate was the lowest - 5 percent. Around 47 thousand square meters of office space were commissioned to use, including Wojdyła Budownictwo company which commissioned Wojdyła Business Park (24 thousand sq.m.) at Muchoborska Street.
Wrocław has been regarded as one of the most investment-friendly place in Poland for some time now. Some even call it the business centre. This short analysis supports this claim. Since the beginning of 2010 construction works on 11.8 thousand square meters have been started and the projects should be commissioned to use by the end 2011. Besides, predictions indicate that in 2011 there will be deficiency of office space and the vacancy rate will amount to 4.5 percent.
Investments under construction include: Odra Tower, investor Gant Development; Promenady Wrocławskie (the foundation stone was laid on May 31st thus beginning the first stage of construction), investor Vantage Development; Wrocławski Park Biznesu II – third stage of construction; Aquarius Busineess House, investor Echo Investment; Gamma Office, investor Vantage Development; Green Towers, investor Skanska Property Poland; Quantum Oławska, investor Quantum Project; Westo Forum, investor Archicom and Sky Tower (works on the office and residential building began in July).