At the end of June, the total supply of modern office space in Krakow reached 1.82 million sqm, making it the largest regional office market in Poland. 434,200 sqm of space (24% of the total supply) is located in the city center, underscoring the importance of this zone as a key office area. In the first half of the year, 14,400 sqm of modern office space was delivered, down 65% year-on-year. New supply closed in two projects: Brain Park C in the Center zone and Roko Office Point in the Southeast zone. A positive sign is the up to 85% occupancy rate recorded in newly completed buildings.

At the end of the first half of the year, there was 44,900 sqm of office space under construction in six projects in Krakow, down 54% year-on-year. More than 70% of this space is located in the city center, with Echo Investment’s WITA project the largest. The developer has planned 26,700 sqm of space in the city’s residential-commercial complex, which will be furnished with workspace.

Despite the challenges, Kraków’s office market saw an increase in tenant activity, with total leasing reaching 93,500 sqm, up 13% year-on-year. The highest tenant activity took place in the Southeast and Center zones, where 24,400 sqm and 23,800 sqm of office space were leased, respectively.

– Krakow remains one of the most important office centers in Poland. Despite an increase in the vacancy rate to just over 20%, we are seeing stable demand for Class A office space. The Center zone has the lowest vacancy rate at 11.9%, showing that tenants still prefer well-located and high-quality offices. New projects currently under construction and stable demand give hope for further development of the market –

say Jarosław Pilch, Head of Tenant Representation Office Agency Savills.

The authors of the report from Savills also point out that despite the challenges, Kraków’s office market recorded a positive net absorption of 4,100 sqm, a significant improvement over the result of -5,800 sqm in the same period last year.

In recent quarters, Kraków’s office market has seen an increase in rental rates, particularly for prime buildings. Asking rents for Class A office space at the end of June ranged from EUR 13.50 to EUR 16.50 per sqm. per month

– Rental increases are dictated by high inflation and rising construction costs. In addition, the market is seeing a trend of increasing incentive packages offered by landlords, offset by higher asking rents –

add Jarosław Pilch.

The report shows that maintenance fees for well-maintained and managed properties typically range from PLN 18.00 to PLN 25.00 per sqm per month, although in some cases they can exceed PLN 30.00 per sqm.