Medium-sized cities forge their own path to success

Challenges faced by the key players on the market create new opportunities for the up-and¬-coming locations. Medium-sized cities are now drawing ever more attention of foreign inve­stors. Quality of life, firm tertiary education, better work-life balance and a chance of a lower attrition rate all play a role in attracting investors to those cities.

2019-04-26 10:07:29

Author: Radek Pituch

Radek Pituch is a lawyer and a graduate of the Cardinal Stefan Wyszyński University and the Lazarski Univer­sity. He completed a number of training courses related to modern management in the organization. For over 8 years Radek has been involved in the implementation of educational, innovative and transnational coope­ration projects under regional operational programs financed with EU funds. On a daily basis he deals with foreign investors.


Over the past 20 years Poland has become the undisputed Business Services Sec­tor leader in Central and Eastern Europe. The total number of BSS centers currently stands at nearly 1 200 and there are ap­prox. 300 000 people working in the sec­tor. Poland is considered worldwide as one of the friendliest locations to do business in. According to World Bank, the total GDP stands a t U SD 526 b n and a 4 .8% growth in 2017 further reinforces the view shared by many investors putting their long-term trust into Poland. Furthermore, it placed 2nd in the World’s Best Countries to In­vest in or do Business for 2018 ranking. Sustainable economic development cou­pled with government support, including a variety of incentive mechanisms such as employment and investment grants and R&D tax reliefs implemented just recently, are some of the key factors drawing new investments into the sector.

Thriving hub

Poland offers well educated, highly quali­fied, and reliable employees with a great knowledge of a whole variety of foreign languages. Importantly, the hubs boasting talented workforce and a strong tertiary education network are spread across the entire country, thus allowing foreign inves­tors to investigate sustainable business conditions in virtually all regions. This is also reflected by the fact that there are 10 000 or more employees working in the Business Services Sector in 7 cities in Po­land already. Some investors choose the well-established safe havens like Warsaw or Kraków, where despite the competition, businesses are still finding room to flour­ish. Others tend to focus their efforts on getting to know the ambitious regional leaders such as Łódź, the Tricity and the Katowice agglomeration. Finally, inves­tors willing to investigate and explore are looking to even smaller locations such as Bydgoszcz and Rzeszów to find great po­tential hidden there.

Investment climate improvement

Significant changes in law favor entrepre­neurs – one such example is the creation of the  Polish Investment Zone spanning the entire country. It was introduced in 2018 and allows companies to benefit from tax exemptions wherever they choose to locate their businesses, as opposed to re­stricting this tool only to areas previously covered by designated areas of particular Special Economic Zones. 2018 also saw the introduction, extension, and refinement of certain R&D-related tax relief mechanisms, such as the ‘IP Box’, which reduces the tax rate to 5% for qualified income.

Polish Investment and Trade Agency (PAIH) is situated at the forefront of the Polish economic diplomacy. The Agency is and always has been active in fostering a fa­vorable investment climate for the devel­opment of the Business Services Sector. PAIH has always emphasized the need to maintain a vast network of partners and cooperants. The network includes busi­ness partners as well as local and regional authorities. This, in turn, allowed PAIH to offer support which is both central and lo­cal at the same time – a holistic offer that fits right into the market requirements of our clients.

2018 was an absolutely record-breaking year for the Agency. In total, we supported 70 FDI projects, with 30 in the Business Ser­vices Sector. These investments are to con­tribute 7 600 new workplaces to the Polish economy. The USA, Germany, the UK and France are still leading the way, but we have observed an increase in BSS investments from Asia – Japan and China specifically.

Kraków, Warsaw and Wrocław remain the top destinations – 22 out of the 30 pro­jects we closed last year opted for one of these locations. Between them, these cit­ies host over 160 000 workplaces spread across 550 BSS centers. These three loca­tions offer a great blend of vast talent pool, top universities and technical schools, high supply of modern office space and a vibrant business environment – a per­fect mix for attracting global investors. However, these locations also have to face the usual issues of hot business destina­tions – higher office space prices, compe­tition on the labor market and relatively high attrition rates.


This is also becoming a more discernible trend in tier 2 locations such as Łódź, Poznań, the Tricity and the Katowice agglomeration. Nevertheless, all these markets record an increase in new investments.


Patrycja Masiarek

NAI Estate Fellows

Specialists at the Poznań NAI Estate Fellows branch see a great potential in the dynamical­ly developing local market. In 2014 and 2015, when the city ranked highest in terms of lowest unemployment, it seemed that investments would be stopped and investors would look to other locations precisely for this reason. Po­znań, however, is one of the largest academic centres in the country, priding itself on the high level of education provided here and the resul­ting availability of highly qualified labor force. Furthermore, the accessibility of professional and qualified personnel leads to strong compe­tition between landlords who try to outbid one another by offering top standard in respect of design, energy certificates and amenities of­fered to occupiers. Poznań keeps up with the prevailing trends, and developers and property managers alike put a lot of emphasis on creating a comfortable working environment, attractive common areas, car parks and shower rooms for cyclists, as well as entertainment zones. The buildings come outfitted with gyms, canteens and medical facilities. The IT sector is growing day by day, and IT businesses often decide to locate their premises in office buildings from a slightly older generation, for which landlords are willing to offer more flexible lease terms, in par­ticular in respect of the size of the leased area and the lease term. A characteristic feature of those entities is their rapid growth, and therefo­re a small space leased initially can evolve into a long-term contract for a large office.

We also have to remember about those te­nants that prefer cozy schemes with a speci­fic vibe and ambience.

The office building developed on the site of the old tram depot, known as Zajezdnia Po­znań, is a scheme addressed to occupiers showing preference for exactly this type of schemes, where in addition to comfortable of­fice spaces, tenants can benefit from a broad variety of services and amenities offered in the modernized historic depot hall.

Architects of their own fortune

Challenges faced by the key players on the market create new opportunities for the up-and-coming locations. Medium-sized cities are now drawing even more atten­tion of foreign investors. In particular, com­panies wishing to take advantage of their presence in Poland generally – or a particu­lar region specifically – choose to inspect this option closely.

Medium-sized cities forge their own path to success. Quality of life, firm tertiary education, better work-life balance and a chance of a lower attrition rate all play a role in attracting investors to those cities.


It is important to point out that the po­tential of medium-sized cities was also recognized by established investors which the Agency worked with over the years – those interested in reinvestment are par­ticularly keen on exploring other locations across Poland, having already grown strong enough in their original location to consider an intra-Poland expansion. These smaller 31 cities build their own sustainable and sta­ble business environment. Market experts indicated that inhabitants of these cities, when presented with a prospect of an in­teresting job available locally, would be will­ing to consider staying in their hometown rather than relocate elsewhere.

Among these locations, Bydgoszcz is the definite leader in terms of the total number of employees, with 6 700 FTEs working in the industry. Lublin boasts the biggest number of centers – currently exceeding 60. Other similar locations such as Rzeszów and Szc­zecin count, respectively, approx. 4 700 and 4 500 people working in the sector. The loca­tions offer a growing amount of modern of­fice space, which is crucial in leveraging their attractiveness. For example, Lublin currently ranks 8th in the country with its office stock exceeding 170 000 square meters. Rzeszów has a total of approx. 105 000 square meters and Bydgoszcz over 64 000 square meters of total office space available.


Barbara Sokolnicka

Investor Relations Manager

Lublin Municipal Office


Investors eyeing untapped potential of mid-sized cities

Lublin as the largest city and academic center in the East of Poland gains recognition of investors who seek business location that might be not that obvious at first sight. It is home to over 340,000 residents (with more than 700,000 in the metropolitan area). Its nine universities provide academic educa­tion to 65,000 students with a broad spec­trum of skills (languages, B&A, technical and engineering, IT). Each year, approximately 20,000 Lublin’s university graduates enter the labor market.

In the context of BSS, IT services are undo­ubtedly Lublin’s specialization. They generate more than a half of the employment in the sector (55%), thereby significantly exceeding the national average (30%), and feature in the portfolio of 85% of the centers based in the city.

The growth of the BSS sector in Lublin would not be possible without availability of proper office space. Currently, there are 51 office buildings in the city offering a total of nearly 205,000 sq m of modern space. More than 91,000 sq m are in the pipeline and under construction.

However, Lublin is not only about business. It is a diverse and welcoming city proud of top quality of life it offers to residents. Smart Traf­fic Management System, green public trans­portation with 124 trolleybuses, city bikes, excellent accessibility (airport and city ring­-road) and a remarkable cultural and leisure offer, all make Lublin a great place to live.

Today, Lublin is the largest center of modern business services in Eastern Poland with the most dynamically growing office market and a pool of skilled workers. Yet, there is still room for new centers and for growth of those that are already in the city. It is estimated that more than 80 BPO, SSC, IT and R&D centers will be operating in Lublin by 2020, employing a total of 9,000 people.

To the rescue

With the development and growing matu­rity of the sector, more and more players want to have a share in its success. There is a noticeable change in the perception of this issue at the level of local authorities. Their more innovative approach to inves­tor assistance leads to a presumption that in the nearest future, some of the compa­nies may find it appropriate and comfort­able to move some of their processes to these regional locations. This issue was already identified by the Ministry of Entre­preneurship and Technology and suitable actions were undertaken, with Polish In­vestment and Trade Agency involved in the process. The Ministry’s pilot programmer named Business Services Centers (Cen­tra Usług Biznesowych) aims to support local authorities in identifying strengths, weaknesses, opportunities and potential threats. The program’s goal is to leverage the BSS potential of less preferred mu­nicipalities such as Radom, Elbląg, Chełm and Tarnów. The concept addresses three main areas that require action in order to improve the potential of these locations, namely the availability of staff, office space, and the creation of a competitive offer cre­ated by local authorities. Further steps envisage preparation of reports, organiza­tion of open days in select cities and active inclusion of the academic society in the whole process. That objective will be ful­filled by providing business- and language-oriented lectures for students and unem­ployed postgraduates.

Thanks to the stable and growing economy, large internal market, increasing operation­al and linguistic spectrum of services pro­vided by the centers, Poland is among the global leaders within the Business Services Sector. The firm forecast for the employ­ment rate to exceed 300 000 employees in 2019 corroborates maturity of the market. Work culture, quality and availability of tal­ents, cultural proximity to Western Europe and the United States, excellent language skills and smaller time differences are all among the factors that make Poland a reli­able location for BSS centers.


Sebastian Osuch

Sales Director – Regional Cities

Business Services Senior Manager

Nowy Styl Group


Polish regional offices – a reference space for CEE projects in BSS

Over the past years, we have seen a rapid gro­wth of the regional office market. This success is owed mainly to the BSS sector. The biggest projects came to our country from investors operating in this particular industry, thus changing the status quo, the potential and the way we perceive and analyses regional cities.

A few years ago, Kraków and Wrocław were the key players in the game. Now, regional cities in­clude the Tri-City, Łódź, Poznań and Katowice, as well as smaller centers such as Bydgoszcz, Lublin, Rzeszów, Szczecin and Opole.

The primary factor for investors choosing a given location is access to well educated workforce, followed by the availability of modern, effective and flexible office space. In many cases, local developers in the cities mentioned above had realized there was po­tential for new projects and delivered to the end customer offices that can be easily com­pared to those in mature European markets. We see that regional clients demand flexible, effective and modern office space. Their offices need to be furnished in line with the current trends, including height-adjustment desks, collaboration zones, meeting spaces, as well as focus and chill-out rooms. A new office can be perceived as a non-salary benefit by employees, especially those from generation Y and now Z. Some of these regional offices are becoming reference spaces for the whole company, and in some cases for CEE projects.

We see future potential for regional markets as new projects have shown that there is still plenty of space for newcomers and for the existing projects to expand, not only regar­ding cost efficiency but also creativity, inno­vation and access to talents.