According to “Office Occupier – Office Market in Tricity, Q1 2024”, a report published by real estate advisory firm Newmark Polska, Tricity remains one of the largest office markets in Poland, with a wide range of offices to choose from. Despite an overall slowdown in development activity across the country, 2023 was a record year for Tricity with office take-up surpassing 140,000 sqm. Tricity’s total take-up for the three months to March 2024 was 23,400 sqm.
At the end of the first quarter of 2024, Tricity’s office stock was close to 1.05 million sqm, up by 3% year-on-year. Over a fifth of that total was in modern office buildings completed in 2020-2023. Last year saw only 33,100 sqm added to the Tricity market – this represented the lowest new supply level since 2012. The largest completion of 2023 was Intel’s head office with an area of 23,000 sqm in Gdansk, while the remaining 10,100 sqm was delivered through two office buildings in Gdansk and one in Gdynia. By contrast, the first quarter of 2024 saw no new supply enter the Tricity market.
“With development activity remaining moderate in Tricity, few new office projects are breaking ground. At the end of March 2024, there were four projects under construction totalling nearly 20,300 sqm, down by 68% from the first quarter of 2023. More than 55% of the development pipeline is in Gdansk. Concerns about high financing costs, as well as changing work models amid a trend towards optimizing office footprints continue to drag on development activity,” says Michał Rafałowicz, Regional Director, Newmark Polska.
Key projects underway include the first building of the second phase of Gdynia Waterfront in Gdynia with an area of 9,050 sqm and the second phase of LPP Fashion Lab in Gdansk (5,000 sqm).
“Although 2023 saw a minor downturn in leasing activity in Poland, it was a record year for Tricity in terms of office take-up. Last year’s leasing volume in Tricity hit approx. 143,900 sqm, the third highest for regional cities, behind Krakow (201,300 sqm) and Wrocław (165,550 sqm). It was also the best result in the history of the Tricity market, marking an improvement of 42.5% over 2022’s total,” says Kaja Karbowska-Nowak, Associate, Newmark Polska.
Occupier demand has remained strong in the region for years, with the average annual take-up figures of over 100,000 sqm in the last five years (2019-2023). The deal count in the first quarter of 2024 was up by 39% from the previous quarter, but down by 51% compared to the same time in 2023. Tricity’s total take-up for the three months to March 2024 was 23,400 sqm.
The structure of take-up in the first quarter of 2024 was dominated by renewals and new leases which accounted for 57% and 39% of all deals respectively. The remaining 4% came from owner-occupier transactions (3%) and expansions (1%). The strongest letting activity was in Gdansk, which saw 18,800 sqm transacted, accounting for 80% of total take-up, while the remaining 20%, or 4,600 sqm, was leased in Gdynia. Tricity offers an attractive business environment that attracts both start-ups and global companies, mainly the IT sector, which generated 49% of the leasing volume posted in the first quarter of 2024.
At the end of March 2024, Tricity’s vacancy rate stood at 13.4%, up by only 0.2 pp from the first quarter of 2023. Subdued developer activity and the gradual absorption of space from standing office stock are expected to result in reduced office availability in the near term. Tricity has approximately 140,500 sqm of ready-to-occupy office space, nearly 40% of which is in office buildings completed in 2019-2023.
“During the first quarter of 2024, Tricity’s headline rents edged up to EUR 13.50-16.50 per sqm per month while service charges rose to PLN 20-25 per sqm per month. Both rental rates and service charges are expected to remain stable throughout 2024 amid a continued trend towards looking for optimized offices in buildings featuring modern ESG solutions that help bring down operating costs,” says Agnieszka Giermakowska, Research & Advisory Director, ESG Lead, Newmark Polska.
