The office market in the Tri-City: Stable but stagnant

Unlike Warsaw's CBD, there are few skyscrapers in the Tri City, but the vacancy rate in class A buildings is markedly lower than in Poznań or Wrocław, for instance, and occupancy averages at around 70 percent. According to Ewa Radomska-Deutsch of Invest House Nieruchomoœci, the rents for top grade space are around zł.56-71 (€12-15) per square meter. In contrast to cities such as Poznań, tenants are staying where they are and there is no noticeable migration to Warsaw, so the market situation is very stable. This is also confirmed by leasing rates, which have only dropped by about 10-15 percent over the last 3 years. The premier office buildings - Alfa Plaza, Baltic Business Center, Office Center Hossa and Chipolbrok - can offer tenants office space of between 18 and 200 square meters. According to a survey conducted in February 2004, the available class A office space in the Tri City is stated in the table below. A few big companies could easily take up all the vacant class A space but they are not coming. As in other Polish cities, the only signs of activity in commercial property in the Tri City are new hypermarkets, as the absence of foreign investors in the city does not encourage developers to construct any more office buildings. Although the city council signed a letter of intent with ING Real Estate for the construction of 'Targ Rakowy and Sienny' almost three years ago, no actual progress has been made on the project. The plan was for the Dutch developer to build a 60,000 square meter complex comprising 23,000 square meters of office space, an 11,000 square meter hotel and parking lots amounting to 48,000 square meters. One of the major problems preventing real estate construction in Gdańsk is its historical architecture and all the legal issues associated with putting up new buildings or refurbishing old ones. ING Real Estate is not the only developer to have had visionary plans for Gdańsk. Pekao Development also signed a letter of intent with the city council to construct a hotel and office buildings, but this project too has yet to get off the ground.