PL

Business services sector in smaller regional cities? Why not?

The impact of the business services sector on the real estate market has been very significant, especially due to the scale of activity of BPO companies. We are now seeing more possibilities for the development of a larger number of Polish cities. There are business services sector investors who are considering Opole, Bydgoszcz, Lublin, Szczecin… the list of such cities is growing, said Tomasz Trzósło, managing director, Poland JLL.

"This is significant for the growth in the development sector in these cities. Among different numbers we are hearing, the more conservative of these indicate that within 3–5 years the market is expect to grow by 250,000 new workers; but there is also the much more optimistic McKinsey report, according to which we should expect 450,000 – 500,000 new workplaces to be created in the next 4–5 years in the sector. Such dynamic growth would be good news for the office market," said Tomasz Trzósło.

The real estate aspect in such an investment is the final thing to worry about in the larger cities, according to the director at JLL. "In the smaller cities, the real estate can be a problem. Smaller cities do not have such facilities and it is hard to imagine providing such space without tenant demand being registered earlier. If there is a tenant who wants to sign a lease agreement for several years and a significant amount of sqm, there will be developers – regional or local firms – who will be eager to erect such a building. Then the bank financing would be possible. But I personally feel that speculative projects in smaller cities are unlikely since this is quite a significant risk for local developers. And from the financial point of view, it is simply too difficult. Maybe one way is for city authorities to could help to develop office space and therefore encourage investors to come to such cities," he added.

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