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Wroclaw: the city's business attractiveness and the office market in Q1 2022. Knight Frank report
Why is Wroclaw an attractive place for business centers (BPO/SSC) and companies planning to enter the Polish market? And how much does it cost to rent an office in Wroclaw? Answers to these questions can be found in the latest report of an international expert in the field of investment consulting and real estate.
Wroclaw is the second regional office market in Poland
At the end of March 2022 Wroclaw had more than 1.28 million square meters of office space, and this means that the city is still in second place in terms of size among regional markets in Poland. This is according to the latest report "Wroclaw: city attractiveness and office market in Q1 2022" published by the London-based Knight Frank - an international expert in advising on real estate markets.
The report was prepared in cooperation with the Wroclaw Agglomeration Development Agency and Michael Page.
Office space increased by over 36 thousand sqm since the beginning of the year, as a result of the completion of the project MidPoint 71 (Echo Investment), which accounted for less than 15% of all space delivered in regional cities in Q1 2022.
If developers keep their schedule, Wroclaw's office market will expand by over 90 thousand sqm by the end of the year. There is almost 117 thousand square meters of office space under construction, 80 percent of which should be completed by the end of the year
New office buildings in Wroclaw in 2022: space, locations
In 2022, 117 thousand sqm of offices are under construction in Wroclaw, nearly 80 percent of which are to be ready by the end of this year. The largest investments still under construction are Centrum Południe II (20 thousand sqm, Skanska) and Infinity (22 thousand sqm, Avestus Real Estate).
Most offices in Poland in Q1 2022 were leased in Wroclaw
In Q1 2022, the Wroclaw office market recorded a lot of lease transactions. In comparison with the beginning of the previous year, nearly 38 400 sqm was leased. (year to year, it's an increase by 85%). It is the best result among the regional cities, accounting for 25% of the total volume of transactions concluded in regional cities in Q1 2022.
Office market in Wroclaw: new agreements, vacancy
The largest share, over 84%, were new agreements (of which pre-let agreements accounted for 19%), while renegotiations accounted for 13% of transactions. The vacancy rate in Wroclaw is one of the highest recorded in regional cities. However, thanks to high demand it decreased by 0.9 pp q/q and amounted to 15.8%, but it is still 1.6 pp higher than in the same quarter in 2021.
A positive sign observed in Q1 2022 in the capital of Lower Silesia is the high tenants' activity, the result of which was the best among all regional cities. The volume of transactions amounted to 38,400 sqm, which was an increase of 85% compared to the same period last year. The structure of leases also sends a positive signal. The largest share, over 84%, was taken by new agreements (of which pre-letting accounted for 15%), while renegotiations accounted for 13% of the transaction volume
Office rental prices in Wroclaw 2022
Asking rents in Wroclaw at the end of March 2022 ranged from 10 to 16 euros per 1 sq m per month.
Pressure from tenants to renegotiate rents and incentive packages should be expected in the near future due to the high availability of office space. On the other hand, rising construction costs (rising prices of construction materials and labor costs), as well as rising costs of servicing construction loans may effectively hinder investors' negotiating power, especially in new buildings. On the other hand, all projects are expected to see an increase in maintenance fees due to the progressive rise in prices of services and utilities
Wroclaw attractive for BPO/SSC centers and companies planning to enter Polish market
New investments on the real estate market are expanding the office offer in Wroclaw. The authors of the report emphasize that due to a wide base of universities and colleges which guarantee access to well-educated employees, Wroclaw is an attractive choice for BPO/SSC centers (Business Process Outsourcing and Shared Service Center i.e. realization of business processes for corporate clients from all over the world) and companies which plan to enter the Polish market.
Wroclaw in international business rankings
The authors of the report emphasize that Wroclaw's investment attractiveness is appreciated in international rankings:
1st place in fDi's Mid-Sized European Cities of the Future 2022/23 - Business Friendliness
2nd place for Lower Silesia in fDi's Mid-Sized European Regions of the Future 2022/23 ranking - Business Friendliness
3rd place in fDi's Mid-Sized European Cities of the Future 2022/23 - Overall
4th place in fDi's Mid-Sized European Cities of the Future 2022/23 - Economic Potential
8th place in fDi's Mid-Sized European Cities of the Future 2022/23 - Human Capital and Lifestyle
Wroclaw City Hall has reliefs and preferences for investors
Municipality of Wroclaw offers investors exemption from property tax on investment in photovoltaic installation, heat pump, recuperator, ground heat exchanger, solar collectors.