According to a report by consulting firm Newmark Poland “Office Occupier – Office Market in Regions”, in 2024 the tenant activity in the office markets of the largest regional cities in Poland (Kraków, Wrocław, Tricity, Katowice, Poznań, Łódź, Lublin, Szczecin) remained steady, and the annual volume of lease transactions exceeded the average from the past five years. The highest demand was noted in urban centers such as Kraków, Wrocław, and Tricity, which strengthened their leading positions among regional markets. Moreover, last year, tenants more often decided to renegotiate lease conditions rather than relocate. The vacancy rate increased slightly, and developers still approach new investments cautiously.
By the end of 2024, the total resources of modern office space in the eight main regional markets outside Warsaw reached almost 6.8 million square meters. During the past year, developers put into use a total of 123,800 sqm of new space in 17 buildings, representing a decline of almost 56% compared to 2023. More than 38% of last year’s supply came in the fourth quarter, with over 47,100 sqm of offices created. Among the most important investments completed in 2024 were: Grundmann Office Park A (20,650 sqm, Q4) in Katowice, Quorum Office Park A (18,200 sqm, Q1), and B10 (14,150 sqm, Q2) in Wrocław, and Brain Park C (13,000 sqm, Q1) in Kraków.
By the end of December 2024, approximately 220,400 sqm were under construction, representing a 5% increase from the previous quarter but a 25% decrease year on year and almost 80% compared to the record fourth quarter of 2017 (1.1 million sqm under construction).
“Despite a slight increase in developer activity per quarter, the volume of space under construction remains low. The most new space is created in Poznań and Kraków, which together account for almost half of the projects under construction in regional cities. Due to the growing availability of office space in existing buildings and the popularity of the hybrid work model, developers still approach new investments carefully,” says Karol Wyka, Managing Director of Office Space, Newmark Poland.
In the last quarter of 2024, tenant activity reached nearly 220,000 sqm, which represents an increase of 4.5% quarter on quarter and 4.6% year on year. This was the best quarterly result since the fourth quarter of 2018, in which lease agreements were signed for over 226,700 sqm. Gross demand for the period from January to December 2024 amounted to 714,000 sqm and was only 3.7% lower than the record volume noted in 2023, but 10% higher than the average for 2019-2023. It is also worth noting that the average size of lease agreements signed rose by 10.4% over the year, exceeding 1,100 sqm.
“Last year, tenant activity in Kraków reached a record level of 266,700 sqm, which represented more than 37% of total demand registered in regional markets. Second place was taken by Wrocław (146,450 sqm) and Tricity (116,300 sqm) came third. In these three cities, lease agreements were signed for over 74% of the registered demand in the regions. Companies from the IT sector (27% of the total volume of lease transactions) and the business service sector (17%) were the most active,” added Karol Wyka.
In the past year, for the first time in the history of regional office markets, renegotiations and renewals dominated the demand structure. In all of 2024, their share reached almost 51%, which means an increase of 11 percentage points compared to 2023. The remaining 49% went to new contracts (39%), contracts for own use (5%), expansions (3%) and pre-lease agreements (2%). This trend is likely to continue in 2025. A key factor encouraging companies to stay in their current locations is the opportunity to avoid the costs associated with arranging a new office.
As of the end of December 2024, the vacancy rate in the main regional markets stood at 17.8%, representing an increase of 0.5 percentage points quarter on quarter and 0.3 percentage points year on year. In all regional cities, except Szczecin, the vacancy rate exceeded 10% and in four of the analyzed locations, it reached 19% or more. The largest year-on-year increase was noticed in Szczecin (+2.9 percentage points) and Łódź (+2.4 percentage points). At the end of the fourth quarter of 2024, tenants had at their disposal a total of approximately 1.2 million sqm of immediately available space in existing buildings – the highest level in the history of regional office markets. However, according to forecasts, the low planned supply of new projects may lead to a decrease in the vacancy rate in the long term.
High availability of space for rent in existing office buildings means that rents remain stable. At the end of the fourth quarter of 2024, monthly rental rates for high-standard offices reached 16.00-17.00 euros per sqm.
“Tenants are most interested in buildings in prestigious locations that meet ESG requirements. As a result, landlords are less willing to make big concessions during rent rate negotiations. In older, less energy-efficient buildings, operating costs are usually much higher, motivating their owners to invest in renovations to effectively compete for tenants,” says Agnieszka Giermakowska, Director of Market Research and Consulting, ESG Leader, Newmark Poland.
Source: https://managerplus.pl/rekordowy-popyt-na-biura-w-krakowie-wroclawiu-i-trojmiescie-w-2024-roku-34169
