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News Release

Lodz, Warsaw

Łódź office market better prepared for tenant expansion

Lodz, Warsaw, 14 March, 2013 r. – Jones Lang LaSalle has published Łódź Office Market Report, summarizing 2012 and analysing key trends for 2013.

​Set out below are the key findings from the research paper:

  • Demand: Leasing activity in Łódź totalled 27,700 sq m in 2012. The largest deals in 2012 included: Polkomtel (a 2,700 sq m deal in Park Biznesu Teofilów I), BRE Bank (a 2,125 sq m deal in Sterlinga Business Center), SWS BPO Poland (a pre-let of 2,100 sq m in Green Horizon II) and Rule Financial (an expansion of 1,750 sq m in Sterlinga Business Center). Take-up activity is expected to remain stable in 2013.
    From the perspective of large tenant requirements, especially from the business services sector, the city offers five office lease options for a minimum of 1,000 sq m in existing buildings and three in projects that are due for completion by the end of 2013. Overall, potential tenants may choose from almost 34,100 sq m of immediately available office space and from 38,100 sq m of currently free space located in projects under construction.
  • Supply: The increase in tenant interest in Łódź was mirrored by the rapid development of its office market during 2005-2010, with an average supply of around 30,000 sq m per annum. Łódź's modern office stock currently stands at almost 250,000 sq m, which is half as much as in Krakow, a city similar in size. The biggest project completed in 2012 was Green Horizon (Skanska Property Poland, phase 1 - 16,500 sq m). 45 100 sq m is currently under construction (with over 15% already secured with pre-let agreements) and is expected to be completed in 2013. The market is unlikely to see any significant commencements of construction of new speculative projects in the short term. The commencement of the majority of the announced projects are subject to securing pre-lease arrangements.
  • Vacancy rate: The economic slowdown in 2009, combined with extensive construction activity  delivering over 41,000 sq m to the market, pushed the vacancy rate up to a record level of 24%. But the existing oversupply started to be steadily absorbed by the market,  with the vacancy rate  currently standing at 13.7%. The relatively significant construction activity in Łódź and the moderate level of demand may once again lead to an increase in the vacancy rate provided that all office projects planned for 2013 will be delivered.
  • Rents: Łódź features relatively low prime rents of €11-13 / sq m / month. Further slight downward pressure in the short term (i.e. over the next year) is possible, but mostly in buildings which currently offer a considerable amount of vacant office space.

Jakub Sylwestrowicz, Associate Director, Tenant Representation Department, Jones Lang LaSalle, summarizes: "Łódź’s office market development is driven mostly by the business services sector companies, which occupy approximately 80,000 sq m amounting to 40% of the total office space supply in the city. 2012 was a breakthrough year  with such leading market players as HP and Samsung announcing the opening of their centres in the city. It should be  underlined that office space demand is driven not only by newcomers, but also by companies already operating on the market, for example Accenture and Mobica. Such companies, as their scale of operations is growing, seek facilities that will fully meet their expectations in terms of technical standard and development opportunities. The market is growing mainly in response to such organizations’ needs. We should also mention companies that do not relocate but expand in their current locations due to their development and employment growth – an example of such an organization is Infosys".