Ready to grow

With total current office space estimated at over 120,000 sqm, Poznań's huge office vacancy rate is finally beginning to abate, thanks to a lack of new office developments completed over the last two years. While in 2003 office vacancy exceeded 30 percent, now the rate has dropped to around nine percent. According to experts, Poznań is set to be the next office market in Poland to take off.

Joanna Mroczek from Jones Lang LaSalle believes that a couple of large leasing contracts, such as those that boosted Wrocław's market recently, are all that's needed to jumpstart Poznań's office market.

"A few such leasing contracts were signed in Wrocław and suddenly it turned out that there was no vacant space. Then developers began buying plots, building offices even without signed contracts," says Mroczek. She adds that an extension of a Special Economic Zone to include an office building - similar to what happened with the Man investment in PGK Centrum in Poznań - is a good way to give the market a big lift.

Most of the modern office space is in the city center. So far the tenant structure has been characterized mostly by small, local tenants. This is slowly changing due to foreign companies offshoring business processes.

The office space planned for completion within the next two years should reach some 70,000 sqm. New projects scheduled for completion between 2007-2008 are Andersia Tower, located on Plac Andersa, Garbary Office Centre on the corner of ul. Garbary and Solna, Ataner Business Centre on ul. Dąbrowskiego, Malta Office Park - the largest office project in the city comprising of six buildings on Al. Baraniaka - and Centrum Obsługi Biznesu Bałtyk on ul. Roosevelta and Grunwaldzka.

Henryk Bielski from King Sturge says that rental levels in the market have recently stabilized and now range between EUR 14-16 (zł.56-64) per sqm in terms of A-class offices and EUR 10-12 (zł.40-48) per sqm for B-class developments.

"That's compared to 2002 when prices reached levels of up to EUR 19 [zł.76] per sqm for A-class office space and EUR 15 [zł.60] per sqm for B-class office space," says Bielski.

He adds that the newly constructed buildings are mostly mixed-use projects. "Andersia Tower will accommodate a hotel and retail space, while Centrum Obsługi Biznesu will offer office space as well as a hotel," he says.