Jones Lang LaSalle presents its latest Katowice Office Market Report, comprehensive and broad overview of the city and its investment attractiveness. The research paper covers elements including infrastructure, labour market, tax and incentives system and office market analysis. The report was prepared in cooperation with Katowice City Hall and Hays Poland.
Patricia Lannoije, Head of Research and Consultancy, Jones Lang LaSalle explains: “Katowice as the major city of the Silesian Metropolis, which has a population of 2 million, is a strong economic and academic centre of Poland. In the past, Katowice was solely associated with heavy industry; today, it is undergoing a complex transformation and becoming an attractive destination for the business services sector. Katowice, with key assets such as its pool of highly- skilled employees, scientific and technical potential, strategic location, well -developed infrastructure, extensive support from city authorities, access to modern office space and high quality of life is now considered an excellent destination for new investment projects. The city was selected by leading global companies, including advanced business services sector representatives Capgemini, Unilever, Ericsson, Oracle and PwC to name but a few”.
Strategic location and well developed infrastructure
Katowice is located in one of the most economically developed regions of the country, at the intersection of two trans-European transport corridors. Its main feature is its very good transportation infrastructure, with three international airports located within a short distance and the well-developed road network, with direct access to two motorways (the A1 and the A4) as well as the Silesian Intercity Road (DTŚ). What is more, Katowice is a major railway hub, linking the city to virtually all destinations in Poland and around Europe.
Incentives available to investors in Katowice
A wide variety of actions are being taken by the city to support investors. It is worth highlighting that the city spends more than 30% of its budget on investment.
Mateusz Skowroński, Mayor’ Plenipotentiary for Strategic Investors, Katowice City Hall, comments: “The choice of location is a highly complex process that depends on a variety of factors. One of the key criteria influencing the decision on location is the availability of public aid and the scope of long term cooperation between the city and the company involved. Katowice offers a comprehensive support system to companies either planning to invest or willing to expand its operations in the city. Investor care in Katowice is provided by the Strategic Investors Assistance Centre specialists. The city also implemented such forms of support as real estate tax exemptions, financial help and employment support from the District Labour Office and Katowice Special Economic Zone operations. It is also worth stressing the university authorities openness to cooperation with investors, as well as other investment incentives including marketing support, providing accommodation for strategic investors’ employees and office facilities for recruitment and training purposes as well as public transport system adjustment in accordance with the investor’s needs. It should be added that besides factors analyzed by investors – human capital, infrastructure, quality of life as well as incentives offered by the city and local universities –a growing importance is ascribed to the supply of green, energy-efficient office space that helps reduce operational costs.”
HR pool attracts BPO/SSC investments
Katowice is also one of the most popular SSC/BPO locations in Poland. In 2011, it was in fifth place with regards to the number of business services centres and third in terms of the number of shared service centres (SSC). World famous companies such as Capgemini, Unilever and Ericsson have been operating in Katowice for several years now but new investors are also interested in the city’s potential as a SSC / BPO destination. Only last year, Oracle and Tele-Fonika Kable, among others, decided to open centres here. One of the key factors attracting foreign investment to Katowice is the access to the high quality HR pool.
Agata Piątek Delivery Manager, Hays Poland, comments: “International companies from the BPO/SSC sector have acknowledged the large pool of highly skilled specialists with a good command of foreign languages. In 2011, nearly 123,000 students in the Silesia Metropolis were studying at 28 tertiary institutions. In Katowice alone, more than 76,000 people attended 15 universities. One third of students chose courses key from the business services sector companies’ point of view like business and administration, Information Technology, engineering and other engineering-related skills. In the same year, the number of graduates in Katowice was 22,000, with a total of 35,500 for the whole region. As for foreign languages, more than 90% of students in Katowice declared they spoke English. Knowledge of French and Italian are the highest in the country. The large number of SSC/BPO centres clearly shows that Katowice offers not only a large pool of candidates for entry-level positions, but also many experienced professionals capable of managing teams and whole processes.”
Average monthly salaries in General Ledger Accounting in SSC / BPO sector in Katowice (gross sums in PLN).
Source: Hays Poland, February 2013
Office market – stable demand and vacant space well-absorbed
- Supply: In 2012, total new supply was 20,650 sq m, more than double the 2011 completions. Currently, around 32,500 sq m of modern office space in Katowice is at the construction stage, of which 77% will be delivered in 2013. That includes, among others: A4 Business Park I (9,120 sq m), Euro-Centrum VIII (6,300 sq m) and Polski Koks HQ (6,150 sq m, owner occupier). Further development plans include Silesia Business Park, A4 Business Park II & III and further stages of GPP Business Park.
- Vacancy rate: At the end of 2012, the vacancy rate in Katowice stood at approximately 10% (29,000 sq m). A further 20,800 sq m is still available for tenants in developments being currently under construction, providing additional leasing possibilities. Due to the moderate construction activity and forecast of stable levels of demand, the vacancy rate is expected to decrease slightly throughout 2013. However, the situation is dynamic and the next few years may bring higher construction activity and more completions, which may put some upward pressure on the vacancy rate.
- Demand: Leasing activity was up during 2012, with take-up totalling 51,400 sq m (up 43% compared to 2011). Almost 82% of signed leases were new deals (including pre-lets and expansions) and 18% renewals. The largest deals in 2012 included: Unilever (a pre-let of 5,400 sq m), Tele-Fonika Kable (a new deal for 3,280 sq m and an expansion for 1,500 sq m), Steria (a renewal of 2,840 sq m), Aegon (a renewal of 2,450 sq m), ING Group (a new deal for 2,400 sq m), Getin Bank Polska (a new deal for 2,200 sq m), PZU Group (a renewal of 2,110 sq m) and Rockwell Automation (a new deal for 2,000 sq m).
- Rents: Prime headline rents in Katowice have fallen over the last couple of years to €12.00 to €13.50 / sq m / month at the end of 2012. Moreover, developers continue to attract tenants by offering additional incentives, such as rent-free periods and/or fit-out contributions, the level of which depends on the original standard of the space. Taking into account these additional tenant inducements, effective rents are typically 10% to 20% lower than headline rents.
Summary of Katowice Office Market
* Gross Take-up = Net Take-up + registered renewalsSource: Jones Lang LaSalle
Rafał Oprocha, Head of Office, Kraków and Katowice, Jones Lang LaSalle, comments: “Katowice, with approximately 290,000 sq m of modern office space, is the fourth largest regional office market, outside Warsaw. Until the late 1990s, office supply in Katowice consisted mostly of refurbished tenements, redeveloped low class office blocks and owner-occupied developments. Currently, Katowice is well prepared to meet the needs of new companies starting their operations in the city, and to provide expansion possibilities for enterprises already operating in the city. More projects are appearing on the market in response to the growing activity of international companies who expect high class office buildings”.