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Poland's office market set to continue record breaking form

Companies signed lease agreements for nearly 723,000 sq m of modern office space in the first six months of 2017. This constitutes the best ever result for Poland's market. In total, nearly 320,000 sq m was completed while 1.8 million sq m of office space remains under construction.

 

Warsaw, 16 August 2017 – Advisory firm JLL summarizes H1 2017 on the office market in Poland[1].

The office market in Poland witnessed further record-breaking results in H1 2017. Demand for office space hit an all-time high of 723,000 sq m which consisted of excellent results recorded in Warsaw (391,400 sq m) as well as other major office markets (331,400 sq m).

“Total demand in H1 2017 among regional markets was a strong 331,400 sq m, which is 24% up on the same period last year. This result is fairly similar to the demand recorded for Warsaw, which further emphasizes the strength of the regional markets. It is also worth noting that an increasing number of companies are analyzing office locations outside the major metropolitan areas due to a more favorable labour market”, comments Łukasz Dziedzic, Consultant, Research and Consulting, JLL.

Outside Warsaw, demand recorded in H1 2017 was divided between Kraków, Wrocław and Tri-City which achieved 98,300 sq m, 91,700 sq m and 73,800 sq m respectively. In total, this constitutes 80% of the regional demand for office space.

Traditionally, large agreements were most often concluded by companies from the business services sector.

 

The biggest lease agreements in Poland in H1 2017

City Building Tenant Space (sq m)
Bydgoszcz Business Park Kraszewskiego (renewal & expansion) ATOS 21,700
Warsaw Harmony Office Center (renewal) Millenium Bank 18,300
Wrocław Business Garden (pre-let) Credit Agricole 15,500
Tri-City Olivia Business Centre (renewal) Energa Group 15,100
Kraków Orange Office Park (renewal) Brown Brothers Harriman 14,700
Warsaw Generation Park X (pre-let) Citi Services Center Poland 13,600
Warsaw Łopuszańska Business Park B (renewal & expansion) Alior Bank 13,400
Warsaw Postępu 14 (renewal & expansion) AstraZeneca 13,200
Wrocław Business Garden (pre-let) Capgemini 13,100

Source: JLL, PORF, www.officefinder.pl, 2017

 

Demand

During H1 2017, the office markets outside Warsaw grew by 188,400 sq m. At the same time, 131,400 sq m was delivered to Warsaw's market.

 

The biggest office buildings delivered for use in Poland in H1 2017

 

City Building Developer Space (sq m) 
Warsaw Business Garden 3 - 7 Vastint 54,800  
Łódź Nowa Fabryczna Skanska Property P  oland 19,400  
Kraków Astris Astris 13,000  
Poznań Bałtyk Garvest Real Estate 12,500  
Warsaw Ethos Kulczyk Silverstein Properties 12,100  
       
             

Source: JLL, PORF, www.officefinder.pl, 2017

 

KArol Patynowski, JLL“Currently, the construction activity for all of Poland's major markets, including Warsaw, totals 1.8 million sq m. Major cities outside Warsaw account for over 1 million sq m – an all-time record for developer activity on regional markets. That volume may seem high, but the high level of absorption of office space among tenants allows for cautious optimism in terms of leasing for upcoming office developments”, explains Karol Patynowski, Director of Regional Markets, JLL.

According to JLL, regional markets are likely to grow by an additional 328,000 sq m in H2 2017. The greatest amounts of new supply, planned for the second half of the year, are to be found in Kraków, Tri-City and Łódź. Furthermore, approx. 155,000 sq m will be delivered to the Warsaw market as well. However, completion of some developments may be postponed until 2018.

“We forecast that Kraków will exceed 1 million sq m of office stock by the end of 2017. Wrocław is likely to do the same in 2018”, comments Łukasz Dziedzic.

 

Vacancy rate and rents

Łódź maintains its first position among cities with the lowest vacancy rate (6%), followed by Tri-City (7.8%) and Wrocław (8.5%). The highest vacancy rate can be found in Szczecin (14.3%), Warsaw (13.9%) and Katowice (12.7%).

In H1 2017, prime rents in Warsaw remained stable and averaged out at between €20.5 and €23 / sq m in the City Centre and €11-€16 / sq m in Non-Central locations. The highest rents outside Warsaw were €13.9-€14.5 / sq m / month in Wrocław, €13.5-€14.5 / sq m / month in Kraków and €13.6-€14.1 / sq m / month in Poznań.

More reports and office market analyses can be found at www.officefinder.pl.

 

[1] Warsaw, Kraków, Wrocław, Tri-City, Katowice, Poznań, Łódź, Szczecin and Lublin