Krakow. Real Estate Market Growth and Business Attractiveness
The office market in Krakow is the second largest in terms of supply in the country, and its resources are rapidly growing, attracting an increasing number of tenants, according to data from REDD, the largest and most advanced real estate database in this part of Europe. The existing building stock in Krakow currently amounts to 1.7 million square meters, while the available space is 282,000 square meters. Another 38,000 square meters are currently under construction.
Dynamic development of infrastructure and public transportation
“Not only commercial real estate, but also road infrastructure and public transportation are developing in Krakow. New investment-ready areas are being created, such as the planned ‘New City’ in the Rybitwy area, covering 680 hectares. The activity of office tenants in previous years reflects a positive image of the city, its competitiveness, and the high availability of human resources,” says Krzysztof Foks, Head of Research at REDD Group.
Challenges in office space leasing after the pandemic
Krakow has seen high tenant interest, resulting in a volume of lease transactions already reaching 58,000 square meters this year. For comparison, in 2022 it was similar to pre-pandemic levels, with a transaction volume (demand) in the REDD database totaling 198,598 square meters throughout last year.
“As shown by the REDD INDEX, offices in Krakow are leased for approximately 433 days. In Warsaw, this period averages 485 days, while in Wroclaw it is 494 days. Along with rising office rental prices, both tenants and landlords feel the pressure associated with increasing rents and operating costs. The uncertain macroeconomic situation and events in Ukraine introduce uncertainty and hinder decision-making and planning in Krakow and other regions of the country,” adds Krzysztof Foks, Head of Research at REDD Group.
Most attractive locations
The highest number of transactions were recorded in the Podgorze and Grzegorzki areas. These are regions with a large number of new office projects in recent times, which attracted tenants’ interest. Central areas near the railway station and office projects with very convenient locations are also highly sought after. Currently, there are 7 buildings under construction in Krakow, with another 9 planned.
The Krakow office market is facing a difficult situation, as do most regional markets in the country, including the level of vacant office space in the city. The small number of newly started office projects during the pandemic has resulted in fewer available office spaces for rent.
In 2022, there was significant tenant activity, but the first three months of 2023 witnessed a slight weakening of this trend. Changes in the way work is conducted may affect the interest in renting office space in the coming months.
As of mid-June, the average vacancy rate in existing office buildings was 15.93%. Although the vacancy rate may remain at a level similar to the end of 2022, the rental market situation is very dynamic and not entirely predictable.
The supply of office space in Krakow continues to grow. Currently, there are projects under development such as Brain Park – an office complex being developed by Echo Investment, Ocean Office Park – a multi-stage project in Podgorze by Cavatina, Fabryczna Office Park – office buildings within the mixed-use Fabryczna City complex, Kreo – a facility located near Bonarka City Center, built by Ghelamco, Mogilska 35, and The Park – a multi-stage investment located in Podgorze, developed by White Star.
Krakow still offers space for further investments. The greater availability of new, high-quality office space allows tenants to regularly improve the standard of the rented space and positively affects the city’s investment attractiveness.
Boom in coworking spaces
In recent years, coworking spaces have become increasingly popular. Krakow is no exception and is rapidly developing in this market. More and more companies are opting for flexible offices that offer various amenities, such as access to modern infrastructure, meeting spaces, relaxation zones, and additional services.
According to the “COWORKING IN POLAND” report prepared by REDD and Finne, Krakow ranks second in terms of the size of the coworking market, offering over 37,000 square meters of space and 4,700 workstations.
Coworking spaces have become an attractive alternative for both startups and larger companies seeking flexible solutions. Krakow offers diverse coworking spaces, both in the city center and on the outskirts, attracting various groups of entrepreneurs and freelancers.
REDD is the largest and most advanced database on the business real estate market in this part of Europe. The platform has been changing the way we think about real estate for 4 years and laying the foundations for a transparent and innovative sector. By utilizing big data, the platform allows data to be analyzed in near real-time, enabling industry professionals to make informed decisions. The platform not only provides data but also offers tools for multidimensional analysis and optimal utilization of information.