Research & Forecast Report

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1 Research & Forecast Report Kraków Office Market September 217 Office market summary The first half of 217 saw over 8,9 m 2 delivered to the market in 8 projects. By the end of the year, the office stock is expected to grow by an additional 86,4 m 2. Following the recent delivery to the market of Equal Business Park B and O3 Business Campus II, Kraków has become the first regional market with modern office space exceeding 1 million m 2. Investors remain optimistic about the future of the Kraków office market, which results in booming development activity. As much as 275,2 m 2 is under construction, 8% of which is planned to be completed in 218 and 219. The major share of this will be delivered within office parks projects consisting of several phases. Annual gross demand for office space in Kraków rose for the fourth year in a row. At the end of H1 217, the takeup volume amounted to 98,3 m 2. Nearly 44% of space was leased as renegotiations and renewals of current contracts. Pre-lets constituted 19% of total leasing activity. Companies operating in the Technology and Business services sectors have leased more than 74,8 m 2 since the beginning of 217, which constitutes 76% of registered demand. The largest transactions included Brown Brothers Harriman (renewal, 14,7 m 2, Orange Office Park), HCL (pre-let deal, 1,4 m 2, O3 Business Campus II and Pegasystems (relocation/expansion, 5,3 m 2, Bonarka 4 Business). Rental rates (EUR/m 2 per month) Office stock evolution (m 2 ) 1,4, 1,2, 1,, 8, 6, 4, 2, f 218f Existing supply New supply Space under construction Source: f-forecast; Colliers International, September 217 Major projects under construction Building Size (m 2 ) Completion year Unity Centre 3, 219/22 Developer GD&K Group and Eurozone Equity Enterprise Park E & F 23,5 217 Avestus Equal Business Park C 23,2 219 Cavatina Class A High Five 1 & 2 22,1 218 Skanska Class B Source: Colliers International, September 217 In the first half of 217 the vacancy rate in Kraków reached 9,2%. It is anticipated that in coming years this indicator will record an increase due to the substantial number of developments in the pipeline. During the analysed period, rental rates remained stable. It is expected that rents for A and B-class space in the upcoming quarters will not record any significant changes. O3 Business Park III 19,7 217 Source: Colliers International, September 217 Echo Investment

2 The Technology and Business Services sector Kraków continues to rank among the top 1 city destinations globally for Technology and Business services, and vies with Dublin as the leading location in Europe (Services Globalisation City Index 217, Tholons). This important sector continues to grow rapidly both in terms of numbers employed, as well as the scope and complexity of services sourced. As nominal growth stabilises at around 1, new jobs per annum (circa jobs per day), Kraków is establishing itself as a centre of business process excellence and business transformation. New Technology & Business Services entrants in 217 Company name Xceedence First Utility Syntel Alight Solutions PeopleScout HedgeServ Undisclosed Source: ASPIRE, September 217 The 217 edition of the ASPIRE Tracker underlines this growth, confirming 1,+ new jobs created in 216 and 1,+ new jobs to be added this year, showing a Compound Annual Growth Rate of 21% for the years It should be noted that this headcount number does not include the multiplier effect on job growth in the local economy as companies providing support services to the industry (recruitment, legal, etc.) also expand. ASPIRE Tracker 12, 15, 9, 75, 6, 38, 45, 32, 27, 3, 22,5 19, 16, 15, Source: f-forecast; ASPIRE, March 217 5, 6,45 7,5 84,5 11, f 218f 219f 22f 21% CAGR At the beginning of 217, the Business Services sector (including Financial Services) employed over 35, people and the Technology sector (including ITO and new startups) employed close to 25,. Both sectors are expected to grow strongly in 217 with the Technology sector contributing close to 5% of new roles as Kraków s position as CEE s Silicon Valley becomes recognised globally. 2 Research & Forecast Report September 217 Office Colliers International in association with ASPIRE

3 Average headcount per company Share of headcount according to the size of the centre 63% 166 companies IT* Average 5% 38% 54% 57% 8 companies Business Services 144 Source: ASPIRE, March Average at January 217 Median at January Median * includes ITO As the industry grows in terms of scale and maturity, there are several visible trends in terms of scope and complexity. In addition to performing critical processes for their global Head Offices, centres are increasingly taking a leading role in new fields of business, including robotics, analytics, procurement services, and software and mobile platform development. Another trend evident over the last 18 months is the establishment and quick ramp up of new Global Business Service Hubs in Kraków. Global players such as ABB, CH2M and IAG are examples of such strategic projects. Previously, centres tended to grow more incrementally over a 5 or even 1 year period. The continuing growth of Kraków centres underlines the depth and capability of Kraków s talent pool, and the viability of the city s leading position in the industry. 25% 13% 29% 18% 8% 11% 5% 6% 8% % 4% up to companies 36 companies 1 companies 16 companies 1 companies 133 companies 71 companies 12 companies 1 companies 2 companies Source: ASPIRE, March 217 Average headcount according to the age of the centre % of total number of centres Share of headcount % and earlier companies 64 companies 43 companies 34 companies 35 companies Average headcount January 217 Source: ASPIRE, March 217 FOR MORE INFORMATION: Dominika Jędrak Director Research and Consultancy Services dominika.jedrak@colliers.com Eoin Kavanagh Research Lead, ASPIRE eoin@aspire.org.pl Copyright 217 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. 3 Research & Forecast Report September 217 Office Colliers International in association with ASPIRE

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