Over 691,000 sq m of office space has been delivered to market since the beginning of 2016. A further 1.43 million sq m remains under development. Tenants continued to be active – companies signed lease agreements for nearly 933,000 sq m.
WARSAW, 8 November 2016 – Advisory firm JLL summarizes the situation on the office markets in Warsaw and eight other major Polish cities[1].
Demand
“Demand for modern office space in Poland continues to be strong. In total, lease agreements for 932,700 sq m were signed between Q1 and Q3 in Warsaw and other major cities. Warsaw accounted for 530,700 sq m, while regional cities came in with 402,000 sq m. What is interesting is the fact that between Q1 and Q3 none of the lease deals signed in Warsaw exceeded 10,000 sq m of space, and much larger lease agreements were concluded in regional cities”, says Mateusz Polkowski, Head of Research and Consulting, JLL.
Selected largest office lease agreements signed between Q1 and Q3 2016 in Poland
| City | Company | Building | Space (sq m) |
|---|---|---|---|
| Wrocław | Kaufland | Kaufland HQ (owner-occupier) | 16,000 |
| Wrocław | Credit Suisse | Grunwaldzki Center | 10,800 |
| Kraków | Aon | Enterprise Park E | 10,700 |
| Kraków | Euroclear | Bonarka for Business G | 10,000 |
| Kraków | ABB | Axis | 10,000 |
Source: JLL, PORF, Q1-Q3 2016
“In terms of office markets outside Warsaw, the highest tenant activity was recorded in Kraków - 149,750 sq m, and Wrocław - 78,850 sq m. Both cities were at the forefront of occupier activity and together accounted for 56% of total demand registered in regional markets. It is worth pointing out that take-up within these two cities was largely driven by pre-letting activity (nearly 40% of the total volume), which has prompted developers to increase construction activity, especially in Kraków”, comments Karol Patynowski, Director, Regional Markets, JLL.
Supply
In total, over 691,000 sq m of office space was delivered to market between Q1 and Q3 in Warsaw and eight other major cities in Poland. Warsaw alone accounted for nearly 391,000 sq m of this total, while regional cities outside Warsaw accounted for 312,500 sq m. Excluding Warsaw, the largest amount of office space was completed in Kraków – accounting for up to 32% of overall space delivered to Poland's regional cities between Q1 and Q3. The largest Q1-Q3 openings outside Warsaw included: Tryton Business House in Gdańsk, O3 Business Campus in Kraków and University Business Park B in Łódź. The biggest project completed since the beginning of 2016 in Warsaw was Warsaw Spire A.
“By the end of Q3, approx. 1.43 million sq m of modern office space remained under construction in Poland. The major regional cities outside Warsaw accounted for 879,000 sq m. High developer activity was recorded in Kraków – 272,900 sq m and Wrocław – 215,850 sq m. Both cities maintain their lead in this respect, and account for around 55% of this pipeline outside Warsaw,” says Mateusz Polkowski.
In Warsaw, approx. 550,000 sq m of office space remains under construction.
Vacancy rate and rents
The vacancy rate in Warsaw stood at 14.6%. Outside Warsaw, the lowest vacancy rate was recorded in Kraków (6.3%) while the highest was in Katowice (15.5%). It is worth noting the drop of vacancy rates in Szczecin, with a downward shift from 17.7 % in H1 2016 to 14.7% by the end of September 2016.
Between Q1 and Q3 2016, prime rents in the centre of Warsaw averaged between €21 and €23.5 / sq m / month, and between €11 and €18 / sq m / month outside the centre. Among the eight largest regional office markets outside Warsaw, the lowest rents were recorded in Lublin (€11-€12 / sq m / month), while the highest in Wrocław (€14-€14,5 / sq m / month).
Between Q1 and Q3 2016, JLL's team of experts advised on office lease transactions for over 200,000 sq m of space throughout Poland, accounting for a 27% market share, the highest result among advisory companies.
[1] Besides Warsaw: Kraków, Wrocław, Tri-City, Poznań, Katowice, Łódź, Szczecin, Lublin.