According to the latest data from Colliers International, a leading commercial real estate advisory firm, nearly 61,000 sqm of office space was delivered in Lodz in 2019, which made the total stock of modern office space in the local market exceed half a million sqm. The city also continues to attract a high level of interest from tenants. Last year the gross demand amounted to 53,500 sqm.
The Lodz Metropolitan Area is the third largest agglomeration in Poland with a population of over 1.1 million, and the sixth largest regional office market in the country. Due to its large human potential, including a strong academic centre, central location in the country and increasingly fast rail and road connections with the capital, Lodz enjoys great interest from investors and the largest developers, such as Avestus, Echo Investment, Skanska, HB Reavis and Ghelamco. Significant investments are being realized by Virako and MMG. Colliers has cooperated with many of them.
– In 2019, the Colliers team from Lodz represented tenants in transactions involving a total of 18.4 thousand square metres. We also supported Avestus in the commercialisation of the Imagine project, advising in transactions for 7.4 thousand square metres, thanks to which the lease rate of the facility reached the level of approximately 75%. In total, therefore, we advised on the lease of almost 26 thousand square metres. Thus, our share in the office market in Lodz in 2019 was 48%, which makes us the market leader among real estate agencies in the region – says Marcin Wlodarczyk, Regional Director of Colliers International in Lodz.
Colliers’ Lodz experts represented clients mainly in concluding new contracts and in renegotiations with expansion. The largest transactions in which they participated last year were rental agreements signed by Nordea, Asseco Poland and Idemia.
– In 2019, we started our operations in Lodz as a property manager, taking over the management of a modern office building in the city center – Lodz 1. In the coming years, we will certainly strengthen our position in this market segment – adds Marcin Wlodarczyk.
Spectacular development of Lodz hubs
In recent years, Lodz has significantly improved its image and business position. The city is strengthening its division into 3 main office hubs: the New Centre of Lodz (NCL), the area around the intersection of Mickiewicza Avenue and Pilsudskiego Avenue with Piotrkowska Street, as well as the area around the intersection of Marszalkow – Pilsudskiego Avenue with Smiglego-Rydza Avenue and Kopcinskiego Street.
The spectacular development of the city can be particularly seen in the New Centre of Lodz, a multifunctional space where a number of investments of various purposes are being developed. The most important one, completed last year, is the Brama Miasta office building. NCL is a perfect example of the growing trend of designing downtown quarters combining all functions: office, residential, entertainment, retail, service and hotel in one place.
The importance of flex space is growing
The year 2019 was the year of huge demand for operators of flexible offices, the so-called flex space. The importance of instant and coworking offices is growing, and their operators have started to explore regional markets more and more. A significant number of players in this sector, which have already leased space, will not start operating until 2020, so it will be a time for them to move to the supply side, test the market and profitability of coworking business models. This year, another big players will appear in Lodz.
– The large supply will certainly encourage developers to keep an eye on the demand, which has been stable in recent years. In 2020, the vacancy rate will increase slightly and we will observe the fulfillment of investments under construction. In the coming quarters it will turn out which of the long planned projects will start and which ones we will have to wait for a little while longer on the way to balance the demand and supply in the local office market – says Andrzej Szczepanik, expert from Colliers International office in Lodz.
In 2019, rents in Lodz recorded a slight increase, and Colliers experts predict that the upward trend will continue this year. The asking rates in the best buildings are at the level of EUR 13.50 sqm/month.