Jones Lang LaSalle have published its latest research city reports. This time analysts focus on the Tri-City area and Kraków.
Commenting on those two areas of Poland, John Duckworth, Managing Director CEE at Jones Lang LaSalle says: “We are delighted to be in a position to publish these reports on Kraków and Tri-City. We believe both markets represent excellent opportunities for occupiers, developers and investors in the mid-term and we are committed to advising our domestic and international clients on prospects in these markets across all asset classes.”
Kraków has started to become competitive with occupiers benefiting from this situation. Therefore it is expected that Kraków will strengthen its position as a strong outsourcing destination in a short to mid term. Rafał Oprocha, Head of Agency in the Jones Lang LaSalle Kraków office points out that: “From the beginning of the year we observe growing activity of BPO sector tenants, willing to cut costs and relocate their operations to Kraków. It looks like the next 2 years will be a perfect moment to relocate or open a new office here, as the market will be tenant favourable, offering better choice of products and flexible lease terms.”
In Tri-City, the region benefits from the availability of interesting development sites with valid master plans. Some international developers have secured the sites for office or mixed-use projects. Magdalena Reńska, Head of Agency in the Jones Lang LaSalle Gdańsk office says: ““Tri-City commercial market looks quite healthy. We still have many requests from big branded tenants concerning modern offices and on the other hand developers are optimistic. In 2009 the supply of new office spaces will be very limited with rather stable rents. So, comparing with other secondary cities I can still call Gdańsk agglomeration a secure land for commercial developers.”
With regards to the property investment market, the analysts say that office pipeline supply makes the city an interesting investment market in the future. Tomasz Puch, Associate Director at Jones Lang LaSalle Capital Markets department comments: “We expect that the investors’ interest in acquiring prime product in cities such as Krakow and Tri-City will remain strong for all sectors although in short term investors' pool will decrease significantly. We believe that the main drivers for the investors will be low vacancy and healthy pipeline combined with high quality product being available on the market. The investment activity will be however noticeably limited by unavailability of bank finance and it is highly possible that yield decompression to the level of 7%+ for retail and 7.5%+ for offices will continue throughout 2009. We expect that both national and international capital will be actively looking to place funds at attractive pricing to benefit from limited investors' audience, which might push the yields even further up.”
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Kraków has one of the lowest shopping centre density ratios compared to major Polish agglomerations while the modern retail market in Tri-City and its agglomeration is well supplied with all retail formats trading on the market: shopping and shopping & leisure centres, factory outlets, retail parks, DIY and furniture and home furnishings stores. Edyta Potera, Associate Director, Retail Agency at Jones Lang LaSalle adds: “ Demand for retail space in Kraków remains strong which results in low vacancy rate in existing centres and new developments under construction and in pipeline e.g. Bonarka”. Tri City being a dynamic market offers expansion opportunities to both developers and retailers. We can observe stable development of various retail formats and new brands entering the market among others Peek & Cloppenburg, Saturn, Zara.”
Tri-City’s and Kraków’s warehouse markets have been treated as marginal and not popular regions in terms of both developers’ and tenants’ activity. There is a chance to change this situation shortly. Mateusz Polkowski, Senior Research Analyst at Jones Lang LaSalle commenting on the situation explains: “Kraków and Tri-City are becoming emerging markets and new important points on the map of warehouses in Poland. I believe that in the near future we will observe a fast growth of these interesting locations. Hard economic situation on financial markets will definitely have impact on the growth dynamics but in my opinion the markets will come out on top thanks to location, infrastructural improvements (like extension of A1 and A4 highways, new facilities in Tri-City’s seaports) and proximity to large agglomerations.”
Tricity report, January 2009
Krakow report, January 2009
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