Kraków’s industrial market is on a remarkable growth trajectory, with the Małopolska region surpassing one million square meters of industrial space for the first time by the end of H1 2024. This milestone, highlighted in a recent report by advisory firm AXI IMMO, marks a significant achievement for one of Poland’s most strategic industrial hubs.
The Kraków industrial sector has seen explosive growth, with industrial and logistical space in the Małopolska region increasing by 171% over the past five years. By June 2024, the region boasted a total of 1.1 million square meters of industrial space. In the first half of the year alone, 131,000 square meters were delivered, with an additional 61,000 square meters currently under construction. Key developments during this period included City Logistics Kraków Airport II, MDC2 Park Kraków South, and GLP Kraków III Logistics Centre.
Kraków’s industrial market is also characterized by one of the lowest vacancy rates in the country, standing at 6.1% at the end of H1 2024, compared to the national average of 8.3%. With about 69,000 square meters of available industrial and logistics space, the region’s low vacancy rate has somewhat restrained the rapid expansion of tenants. However, developers have responded to the demand by delivering nearly 300,000 square meters of new space over the past two years, allowing local businesses to expand, modernize, and consolidate their operations.
Marta Nowik, Director of Industrial & Logistics at AXI IMMO’s Kraków branch, notes that despite the challenges, the region is poised for further growth. “The region’s low vacancy rate has slowed tenant expansion, but the strong need for industrial space has driven significant development. We expect more investments to commence in the coming quarters as demand continues to rise.”
In 2023, the Małopolska region saw a record 232,000 square meters of leases signed, a 4% increase over 2022. Although the first half of 2024 saw a lower take-up of 43,000 square meters due to limited available space, the high level of leasing interest indicates the sector’s continued health and vitality.
Kraków’s strategic location, particularly along the A4 motorway near Balice airport and Skawina, enhances its significance in both regional and cross-border logistics, particularly in servicing Ukraine. The city’s industrial market benefits from its proximity to renowned technical universities, such as the AGH University of Science and Technology and the Cracow University of Technology, which supply a steady stream of skilled labor. The completion of the S7 road later this year is also expected to boost the potential of the region’s northern areas.
However, the market faces challenges, including competition from the larger Upper Silesian market and limited land availability. Despite these hurdles, the Kraków region continues to attract significant investment, particularly from companies requiring highly skilled labor. A recent example highlighted by AXI IMMO is a German construction firm that established an R&D department in Kraków, drawn by the region’s advanced infrastructure and human potential.
