The International Advisory Agency Cushman & Wakefield has summarized the situation in the biggest office markets in Poland at the end of the third quarter of 2024. In the regions, the level of demand was similar to the record-breaking period for the largest regional cities in 2023. This indicates a consistent stabilization of the rental market. At the same time, the stagnation on the supply side and a small volume of projects under construction will in the future translate into a decreasing index of space for rent.
SUPPLY: Growth at a slower pace, 75% less office space under construction
At the end of the third quarter of this year, the total resources of modern office space in the nine largest markets in Poland exceeded 13 million square meters.
The total size of the projects completed so far is nearly 152,000 square meters, with the most space being delivered in Warsaw, Wrocław, and Krakow. A consistent decrease in the volume of new supply has been visible on the Polish office market over the last three years. Despite the start of construction of individual office buildings, the overall scale of projects remains low. For example, in Warsaw, only about 210,000 square meters are currently being developed. In regional cities, just over 200,000 square meters are still under construction. This represents only 25% of the construction volume achieved before the pandemic, comments Ewa Derlatka-Chilewicz, Head of Research Poland, Cushman & Wakefield.
The largest buildings completed so far include Quorum Office Park A in Wrocław (18,200 square meters – Cavatina Holding), Lixa E in Warsaw ( 16,900 square meters – Yareal), the renovation of the Saski Crescent office building in Warsaw (15,500 square meters – CA IMMO), and the completion of the Vibe I office building in Warsaw (15,000 square meters – Ghelamco).
According to Cushman & Wakefield estimates, the Polish office market will expand by about 70,000 square meters by the end of the year. We forecast that in 2025, the volume of new supply will reach about 220,000 square meters, which will be similar to current figures. Higher developer activity is expected only after 2026, added Vitalii Arkhypenko, Market Analyst, Cushman & Wakefield.
DEMAND: Tenant activity similar to last year
Total tenant activity in Warsaw in the first three quarters of 2024 was 492,200 square meters and remained at the same level as in the similar period in 2023. This is a result of gradual stabilization in the rental market and a visible trend of optimization of office space by tenants present on the market, explains Jan Szulborski, Business Development & Insight Manager, Cushman & Wakefield.
VACANCIES: Stabilization with potential for decreases
The average vacancy rate in Poland at the end of the third quarter of 2024 was 14.1%, which is an increase of 0.1 percentage points compared to the third quarter of 2023, but a decrease of 0.3 percentage points compared to the second quarter of 2024. In the capital, the non-rental rate decreased by 0.2 percentage points compared to the previous quarter and was 10.7%.
LEASE RATES: for the most part unchanged.
The best office space in the City Centre area in Warsaw cost, on average, 22-26 EUR per square meter per month, while in locations outside the Centre it was around 13.50-16.50 EUR per square meter per month. In the regional cities, the best downtown offices were offered on average in the price range of 12.50-16.50 EUR per square meter per month, with rent rates higher than average being noted in newly delivered buildings or those located in good locations.
Source: https://managerplus.pl/rynek-biurowy-w-polsce-na-koniec-iii-kwartalu-2024-stabilizacja-popytu-i-spadek-nowej-podazy-62304
