In the first half of 2022, leasing activity in the Krakow office market reached 109,000 sq m, accounting for 70% of 2021’s total and representing a 44% increase year-on-year. Looking ahead, Krakow is expected to see gradual rental growth in the near future driven by rising construction costs and high inflation, says Savills.
According to Savills latest report, Krakow’s total office stock reached 1.66 million sq m in the first half of 2022, up by close to 4% year-on-year. At the end of June 2022, the occupancy rate for office buildings completed in 2022 stood at 75%, with just 11,800 sq m remaining vacant.
The office development pipeline in Krakow currently amounts to 156,800 sq m, the second highest result for Poland’s regional cities, just behind Wrocław. The largest projects underway include Cavatina’s Ocean Office Park B (26,500 sq m), Ghelamco’s Kreo (23,000 sq m) and Echo Investment’s Brain Park (23,000 sq m and 21,900 sq m) in the centre of the city.
Savills notes that, due to a relatively low level of new supply in 2022, robust demand and a low proportion of renewals pushed office absorption to 38,700 sq m.
“Occupier activity has improved significantly in the Krakow office market. We are currently busy with many projects for both newcomers and companies present in the city which are keen to retain or expand their offices. We also continue to see high demand for coworking office space albeit availability is beginning to shrink,” comments Agnieszka Kuehn, Regional Manager, Office Agency, Savills.
According to Savills data, Krakow’s vacancy rate stood at 16.2% at the end of June 2022, up by 0.6 pp year-on-year. Prime office rents remained in the range of EUR 13.5-15.5 per sq m per month.