Krakow Office Market: A Half-Year of Unprecedented Growth

 

The first half of 2025 marked a truly exceptional period for Krakow's office sector. According to Savills, the market recorded a phenomenal 172,000 square meters of demand, representing a remarkable 85% increase compared to the previous year. This surge highlights Krakow's enduring appeal as a key business hub in Central and Eastern Europe.

 

Falling Vacancy Rates Indicate Strong Market Health

 

Reflecting the robust demand, the overall office vacancy rate in Krakow saw a significant decline, dropping to 17.3% – a decrease of 2.9 percentage points from the end of H1 2024. This trend points to a tightening market, particularly in prime locations. Notably, the city center maintains the lowest vacancy level, at just 7%, underscoring its desirability. As of the end of June, 317,500 square meters of modern office space remained available for lease across the city.

 

Current and Future Supply Dynamics

 

Despite the high demand, no new office buildings were delivered to the Krakow market during the first half of 2025, which contributed to the falling vacancy rates. However, the development pipeline remains active, with 65,200 square meters currently under construction. Looking ahead, the market is projected to expand by approximately 100,000 square meters by the end of 2027, offering future opportunities for businesses planning their expansion or relocation in the medium term. Krakow's total modern office stock stands at 1,834,000 square meters.

 

Demand Driven by Lease Renegotiations and New Agreements

 

The structure of demand in H1 2025 reveals a significant trend towards lease renegotiations, which accounted for a substantial 71% of all transactions. This indicates that many existing tenants are choosing to secure their presence in Krakow's dynamic market by renewing their current agreements, often involving an average volume of nearly 3,000 square meters per renegotiation. New lease agreements also played a vital role, making up 21% of the total demand, showcasing continuous interest from new entrants and expanding companies.

 

Rental Trends and Tenant Incentives

 

Rental prices for top-tier office spaces in Krakow typically range from 14-17 EUR per square meter per month. For the most prestigious projects, rents can reach up to 19.50 EUR per square meter. While rental rates have seen an increase, this has been strategically balanced by landlords offering richer incentive packages for tenants. These incentives can significantly improve the overall terms of a lease agreement, making Krakow an attractive option even with rising headline rents.

 

Krakow's office market clearly demonstrates resilience and strong growth, positioning it as a highly attractive destination for businesses seeking high-quality office space. The combination of robust demand, strategic new developments, and flexible leasing terms creates a dynamic environment for companies looking to establish or expand their operations.

 

Source: savills.pl