Supply of office space under construction is the lowest in years. However this trend is temporary and next year we can expect a boost in development activity. Vacancy rate is dropping, but still remains on one of the highest levels compering to other major Polish cities.
As stated in „Market in Minutes – Office market in Katowice 2017”, Katowice are fifth largest office market in Poland. Capital city of Upper Silesia is overtaken by Warsaw and three key regional markets – Kraków, Wrocław and Tricity.
„Being the heart of agglomeration inhabited by over 2.1 million people, one of the largest academic centres in the country and the centre of one of the largest industrial areas in Europe, Katowice is an attractive location for IT and SSC companies” – says Tomasz Buras, Head of Poland, Savills.
Office stock in Katowice at the end of Q1 2017 stood at 447,100 sq m. The advantage of the city is the fact that office buildings available for rent are quite young with over 1/3 of supply completed since 2014. Share of buildings of over 10,000 sq. m is 50%.
Development activity in the city is currently at the lowest level since 2011. We expect the office stock to increase with only 7,700 sq m this year. Another 35 300 sq m will be completed in 2018, including TDJ Estate's .KTW I (18,200 sq m) and the fourth building at Silesia Business Park by Skanska (12,000 sq m).
“New supply in Katowice in 2017 will be one of the lowest ever recorded in Katowice and the lowest when compared with other major cities in Poland. However already in 2018 development activity will rise” – says Wioleta Wojtczak, Head of Research, Savills.
Since the beginning of 2016, gross take-up in Katowice reached 47,600 sq m of which ca. 5% took the form of lease renewal or renegotiations and 10% were due to expansions. 56% of all transactions were new lease or relocations. The largest transaction from the last 15 months was Rockwell Automation in A4 Business Park (7,400 sq m). The transaction took the form of pre-lease agreement, which mean it was signed for the office space in a project that is not yet delivered.
Due to low new supply level availability of office space in Katowice at the end of Q1 2017 stood at 14.6%, down 2.8 pp when compared y-o-y. Despite low development activity vacancy rate in Katowice is still on one of the highest levels compering to other major cities in Poland The highest vacancy level is noticed in the newest buildings completed since 2016. According to Savills forecasts, the vacancy rate in the city is expected to decrease by the end of 2017, but still will remain on relatively high level. Prime headline rents in Katowice are in range of EUR 13.50 - 14.00 per sq m/month and despite decreasing availability of office space are expected to remain stable over next months.