Wrocław overtook Kraków in terms of office take-up in Q1. There is 1.66 million sq m of office space under development, of which 965,000 is located outside Warsaw. Historically, this is the highest construction activity registered on Poland's regional markets. Solid growth in office demand when compared to the corresponding period of 2016.
WARSAW, 22 May 2017 – Advisory firm JLL summarizes Q1 2017 on the office market in Poland.[1]
During the first three months of 2017, companies signed lease agreements for 371,700 sq m of office space, of which 177,700 sq m was leased on markets outside Warsaw.
“During Q1 2017, the office market achieved excellent results – take-up in Warsaw alone was 36% higher than the first three months of 2016. Outside Warsaw, the amount of leased office space was nearly two thirds higher when compared to the corresponding period last year. This augurs well for the remainder of the year, as the office market usually develops at a slower pace in Q1”, comments Mateusz Polkowski, Head of Research and Consulting, JLL.
The biggest lease agreements in Poland in Q1 2017
| City | Building | Tenant | Space (sq m) |
|---|---|---|---|
| Tri-City | Olivia Business Centre | Energa Group | 15,100 |
| Kraków | Orange Office Park III Den Hague | Brown Brothers Harriman | 14,700 |
| Warsaw | Postępu 14 | Astra Zeneca | 13,200 |
| Wrocław | Business Garden I | Capgemini | 13,100 |
| Wrocław | Sagittarius Business House | EY | 10,500 |
| Warsaw | West Station II | Diebold Nixdorf | 9,000 |
| Wrocław | West Link | Nokia | 7,450 |
| Warsaw | JM Tower | ZTM Warszawa | 7,300 |
| Warsaw | G9 | Company from the public sector | 7,200 |
Source: JLL, PORF, www.officefinder.pl, 2017
“Outside Warsaw, the lion’s share of office take-up was divided between Wrocław and Kraków, where demand reached 58,900 sq m and 52,500 sq m respectively, and equates to 63% of overall regional demand on office space. For the first time ever, the take-up registered in Wrocław was higher than the take-up in Kraków”, says Karol Patynowski, Director of Regional Markets, JLL.
Numerous lease deals were concluded by the business services sector.
“One of the engines for the growth of the office market is the business services sector. The industry has greatly contributed to these strong results in the area of demand for office space. The sector was responsible for 57% in overall take-up in markets outside Warsaw. In Wrocław and Kraków, it amounted to 74% and 69% respectively”, adds Karol Patynowski.
Supply
In Q1 2017, the office market in Poland grew by 151,400 sq m, including 67,200 sq m located outside Warsaw. In this category, regional markets were dominated by Kraków.
According to JLL, the office market in Poland is likely to grow by approx. 800,000 sq m in 2017, with regional cities experiencing growth of over 500,000 sq m. Provided that developers’ plans are delivered on schedule, this will constitute the highest ever annual supply outside Warsaw.
“Currently, there is 1.66 million sq m of space under development in Poland, with 965,000 sq m located outside Warsaw. Regional markets have never witnessed such high construction activity before. The highest developer activity of 700,000 sq m is registered in Warsaw. Poland's capital city is followed by Kraków with 268,200 sq m of space currently under construction, Wrocław with 208,100 sq m and Tri-City – 150,000 sq m. Taking into account the scale of office stock under development, we predict that Kraków will likely exceed the 1 million sq m mark by the end of 2017. Wrocław will likely achieve the same in 2018”, says Mateusz Polkowski.
Vacancy rate and rents
Łódź retains its leading position in terms of the lowest vacancy rate (5.8%), followed by Kraków (6.8%). The highest vacancy rate was recorded in Katowice (14.6%), Warsaw (14%) and Szczecin (13.9%).
In Q1 2017, prime rents in Warsaw averaged out at between €20.5 and €23.5 per sq m in central locations and €11-€16 per sq m outside the city centre. Prime rents outside Warsaw were between €13.9 and €14.5 per sq m a month in Wrocław, and €13.5-14.5 per sq m a month in Kraków.
More reports and office market analyses are available at www.officefinder.pl.
[1] Warsaw, Kraków, Wrocław, Tri-City, Katowice, Poznań, Łódź, Szczecin and Lublin