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For many years now, together with Krakow City Hall, the market research department of Knight Frank has been preparing a report “Krakow – commercial real estate market”, which focuses on such sectors as: offices, coworking spaces, retail, warehouses, hotels and investments. In our study we thoroughly analyze such factors as supply, demand, vacancy rate, resources, market structure and capitalization rates. This time, a unique character invites you to read the content – the Lady with the Dragon.

Office market in Krakow

Krakow continues to be the strongest, most dynamically developing regional market in Poland. Due, however, to the still ongoing COVID-19 pandemic, tenant interest in Krakow’s office market remains weakened, with take-up lower than in pre-pandemic years. As a result, some developers have opted to amend their schedules, and in 2021 only some 60,000 sq m of new space was completed, although another 190,000 sq m is under construction. Due to the reduced take-up and lower market absorption, the vacancy rate increased significantly compared to the previous year.

Coworking space in Krakow

Before the COVID-19 pandemic, remote working or hybrid working systems were considered more of a benefit for employees than a standard element of workplace strategy. Recent global changes, however, have necessitated a different approach from employers, and working from home has become a fundamental element in workplace organisation. Over the past two years, a significant number of companies have moved to a hybrid mode of working, giving the opportunity to work from both home and office, allowing employees greater flexibility.

Retail market in Krakow

Following the difficult situation for the Krakow retail market in 2020, caused by the COVID-19 pandemic, the condition of the sector began to gradually improve in 2021. Although it is visible that shopping centre operating figures have yet to return to 2019 levels, the turnover figures between May and December 2021 stood at 130% of the figures recorded in the corresponding 2020 period. In the months of May-December 2021, the average footfall in shopping centres showed an upward trend, reaching 92% and 127% of the values for 2019 and 2020, respectively. Moreover, in December 2021 turnover levels returned to those of the pre-pandemic period, giving positive signals for the retail sector, which will further attempt to return to normal in 2022.

Warehouse market in Krakow

The warehouse market in Krakow has been growing steadily since 2006, although it remains one of the smallest in Poland in terms of existing supply. The region is conveniently situated close to the country’s southern border, and it benefits from a constantly developing road infrastructure (the A4 motorway, and the S7 and S52 expressways), linking various locations across Poland and Europe. That said, Krakow has relatively high prices for industrial land and is located close to Upper Silesia – Poland’s second largest industrial hub, somewhat restricting the rapid development of the warehouse sector in the Małopolska region as a whole.

Hotel market in Krakow

To Polish and European tourists alike, Krakow is viewed as one of the most attractive city break destinations. After Warsaw, the city is also the second most important economic hub in Poland, playing host to companies from the business services, new technologies, finance, IT and telecommunications sectors. As a result, the attractiveness of the city is growing by the year, offering better and better opportunities for the development of the Krakow hotel sector. Annually, the city was visited by millions of tourists, not only from Poland and Europe, but also from other parts of the world. As a result of the COVID-19 pandemic, however, the situation changed dramatically in the spring of 2020, bringing a temporary slowdown in the pace of growth in Krakow’s tourist traffic – a slowdown observable also in 2021.

Investment market in Poland

The volume of capital invested in the Polish property market in 2021 shows that foreign investors’ moods have markedly improved compared to 2020. Over the course of 12 months, approx. EUR 5.75 billion was invested in Poland – over 7% more than in the previous year. This was also the third highest result (after 2018 and 2019) in the near 25-year history of the Polish investment market. Capital from European countries was dominant in 2021. Investors from Germany, France and the CEE region (e.g. the Czech Republic, Slovakia, Hungary) accounted for over 50% of the annual transaction volume, with a further 26% coming from North America and 10% from Asia.

Full version of the report is available in the “CONTACT” tab, where you can download all our publications. Should you have any additional questions, please do not hesitate to contact us:

Elżbieta Czerpak
Director of Market Research department
E-mail: elzbieta.czerpak@pl.knightfrank.com