The crisis in the real estate market has influenced not only housing segment. In the case of commercial property in Krakow, after years of strong growth in 2009, the market began to show a downward trend as well. The main factor that determines this situation is the oversupply of space. In recent years, a number of investments in Cracow were created, which can give the companies better deals. It should be noted that the demand raised by the company in the years of economic boom was savagely revised by the crisis. At this point the office real estate market has become a customer market. Cracow is a recognizable city around the world. There are many factors in favor of the development of the local commercial real estate market in this city. It's famous for, e.g. well-qualified staff, resulting in strong growth of markets such as the field of Research & Development, production systems and outsourcing of financial services. Cracow is an ideal location for large corporations also because of its location close to strategically important cities (Prague, Bratislava) and good communication with Silesian agglomeration.
In recent years we have seen a significant increase in new office space. Movement in passing of new investments resulted primarily from the procedural issues (obtaining the relevant certificates and licenses).The increase in the supply of office space allows customers a wider choice of location for their business. The primary endpoint in real estate is location. In the case of segment of commercial real estate, what is significant, is good communication. It can be assumed that, contrary to the locations offering poor communication, the demand will be much higher for the office that is well connected with the main arteries of the city. Before the economic downturn we noted almost full use of the offered space. The vacancy rate in Krakow was at a relatively low level of few percent. It is currently about 9 percent. Although some experts tend to shorten the periods of the lease agreements, in the case of real estate office, the minimum duration of the lease is 5 years. However, we can still observe the agreements concluded for a period of 7-10 years. Currently, it is much easier to negotiate additional amenities including the pause in payments.
Despite the difficult situation, it seems that the market will tend to a balance between supply and demand due to the fact that the supply has been verified by the difficult access to credit and not enough planned investments have been completed. Now there is a glut, but finished surfaces have a chance to be filled by those tenants, whose lease agreements in older locations are ending. You can also count on the development of some of the companies that will be looking for new locations. Generally, the revival of demand is apparrent - says Monika Franaszek, commercialization specialist in Buma Group.
|Rent rates in A class office buildings||14 - 16 euro/msq|
|Rent rates in B class office buildings||12 - 14 euro/msq|
|minimum rent time||5 years|
|vacancy level in Cracow||9%|