Rafaů Oprocha, Head of Agency in the Jones Lang LaSalle Kraków office points out that: “The vacancy rate stabilised and was around 9% over the last 6 months. This implies a wider availability of office space, which is in contrast to the situation observed in 2006-2008 when most of lease agreements were pre-lets with a necessary waiting period before the building is completed. Potential occupiers have now a number of leasing opportunities including immediate leasing options which effectively allow easy market entry and expansion. The market stabilisation was also demonstrated in headline rents which levelled off at €14-15/ m˛/ month after peaking off at €16-18/ m˛/ month in 2007 and 2008.”
Anna Bartoszewicz-Wnuk, Head of Research and Consulting in the Jones Lang LaSalle comments: “End of 2009/ beginning of 2010 saw a slight market recovery which was pronounced in the take-up volume. Q1 2010 saw lease agreements (excluding renegotiations) signed for a total of 19,000 m˛, (excluding renewals) which is comparable to the take-up level from the entire 2009 when occupiers were holding relocation and expansion decisions.”
With regards to the property investment market, Tomasz Puch, Director at Jones Lang LaSalle Capital Markets department says: “The first several months of 2010 saw increased investors’ activity compared to 2009. This activity is not reflected in transactions’ closings yet, but it certainly can be seen in increasing numbers of deal discussions and submissions of letters of intent for acquisitions of various assets. These are likely to materialise in the transactional volumes later in 2010. Aligned with the situation observed on other major Polish markets, the investors’ interest in Kraków was limited over the past 15 months with only two transactions closed in Kraków since the beginning of 2009.
We expect that the weaker appetite from investors for assets located in the Polish major and secondary cities will continue throughout 2010. Exceptions include assets secured with long term leases for a minimum of 5 years and only those who accept a yield correction in comparison to 2008 will actually transact.”
Kraków has one of the lowest shopping centre density ratios compared to major Polish agglomerations. Edyta Potera, Associate Director, Retail Agency at Jones Lang LaSalle comments: “The opening of the Bonarka shopping and leisure centre in Autumn 2009 brought about some changes to the local shopping patterns and retail hierarchy. The delivery of nearly 100,000 m˛ of retail space, combined with the economic slowdown in 2009, adversely affected the vacancy rate in Kraków which grew from 1.5% at the beginning of 2008 to the current 2.5%. At the moment, prime shopping center rents are €40-45/ m˛/ month, 5-10% below the levels registered prior to the economic slowdown of H2 2008 – 2009.”
Edyta Potera adds: “Kraków, which is a strong tourist destination, has also arguably the best high street area in Poland. Strong retail appetite coupled with very limited supply of prime high streets units drove prime retail rents in this area to €85-95/ m2/ month for some prominently located units, a level above that in Warsaw high street area.”
The warehouse space supply to support the growth of the retail, logistic and production occupiers in the region is still limited. With the warehouse space stock of 85,000 m˛, Kraków remains the least developed warehouse market compared to the other major warehouse markets in Poland. The Kraków wider region has been featuring for a while one of the lowest warehouse vacancy rates in Poland at 8% in Q1 2010. This, coupled with relatively high land values, implies that the region has one of the highest warehouse rents in Poland, second only to Warsaw’s Zone 1 We predict Kraków’s warehouse market is set to remain predominantly local in character, mainly responding to the local demand.
Source: JLL |
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