Business Development and International Relation Bureau,
City of Łódź Office,
For many years now, Polish cities have been developing dynamically, fitting in this way with the global trend of urbanisation. There are several various possible scenarios of this process. The most common one entails the development of individual metropolitan areas, while according to another – less common but exceptionally interesting – the development is based on the emergence of natural partnership between two complementary urban and business centres. Duopolis, as the concept of the bilateral cooperation of the cities is called, is the development direction envisaged by the Polish cities of Łódź and Warsaw.
Despite to what it might seem, Duopolis is a quite widespread urban development model. Some well-known worldwide examples of this include, among others, two Finnish cities – Helsinki and Tampere – or the capital city with nearly 640 thousand residents and the second largest city in Finland with 235 thousand inhabitants, localized at a distance of approx. 180 kilometres. The same idea is basis of the collaboration of such cities as Bratislava and Vienna, Baltimore and Washington, Birmingham and London, Copenhagen and Malmo, or Glasgow and Edinburg.
In Poland, the development of the residential and office infrastructure, as well as of road and railway connections, has given rise to a new example of the natural collaboration between two large agglomerations, localized at a distance of approx. 120 kilometres: Warsaw and Łódź – or the Polish capital city with almost 1,8 million inhabitants and the third largest city in Poland with 690 thousand inhabitants. It is easy to count that the total number of inhabitants of this Duopolis amounts to almost 2,5 million and considerably exceeds the number of residents of most of other agglomerations in the CEE region.
Until recently, Warsaw was the magnet attracting both skilled employees looking for the most favourable employment conditions and investors seeking for a suitable location for their business in central Poland. However, in recent years, this trend has been changing in favour of Łódź which steadily increases its attractiveness. Every year, driven by the extension and modernisation of the road and railway infrastructure linking the cities and the planned construction of the new Central Polish Airport midway between them, this process becomes more and more dynamic.
Although the improvement in logistics and infrastructure are undoubtedly important factors enhancing the development of the Łódź-Warsaw Duopolis concept, it is also worth examining the differences between the cities, determining the complementary nature of this relation.
On the one hand, thanks to their rich cultural and entertainment offer, vast availability of housing as well as increasing attractiveness of labour markets, both cities are great places to live and work in. On the other, although the gaps are narrowing, there are still significant differences in salaries, in particular in the business services sector, and, at the same time, in costs of living between the cities. Thus, the average gross pay in the corporate sector in Łódź is approx. 1,500 PLN lower than in Warsaw, and the average costs of living in Łódź are on average 40 percent lower than in Warsaw.
Apart from that, the main differences lie in renting costs and in the competitiveness of the office market. Thus, in the New Centre of Łódź, in Q2 2019, the rates in the city centre varied from 12 to 14 euro per square meter a month, whereas in Warsaw, in the Central Business District (the city centre), it was 20.5-24 euro per square meter a month. Only outside the city centre, like in Służewiec Przemysłowy district, the average rent in Warsaw approx. 11-15 euro per square meter a month.
Until recently not enough appreciated, Łódź is today an important centre for investment and one of the most attractive markets for all sorts of real estate projects in the region. According to recent data, total investments in Łódź from the beginning of 2017 to August 2019 reached over 625 million euro. The office and industrial sectors account for as much as 37 percent of total investments. In Q1 and Q2 2019, there were nearly 30 thousand square meters of new office space with over 30 thousand more to become available by the end of the year. Furthermore, roughly 70 thousand square meters of office space is to be set to be completed in 2020. This is good news for the city, as it shows a high level of interest from investors.
The Łódź-Warsaw Duopolis, offering a lower cost alternative for investors, excellent logistics, availability of workforce and office space, generates a functional synergy. Due to costs efficiencies, companies are eager to locate their back office functions in Łódź, while the headquarters (front office) remain in the capital.
Given the dynamic development of the office infrastructure in Łodź, the shortening travel time between the Polish capital and Łódź, the proximity of two existing national airports and of the third one to be constructed and launched in a very near future, the Warsaw-Łódź Duopolis is becoming a reality. Together, exploiting the potential of their cooperation on a bilateral basis and of a complementary investment offer, the cities are most likely to create one of the largest, if not the largest Duopolis in the entire Central and Eastern Europe region, fully responding to the needs of international investors.
Expert article 2619