The next supply gap, stable quarterly demand, remote work in the Labor Code, proptech, ESG, and demolitions – AXI IMMO, the largest Polish consultancy firm, presents six key trends in the office market along with a presentation of estimated data for the sector by the end of 2023.
Supply at two speeds – supply gap in Warsaw, high activity in the regions
As previously announced, the period of increased new office space supply ended in Warsaw in 2023. Such projects as Varso complex, The Warsaw Hub, Forest, Fabryka Norblina, Skyliner, Generation Park office complex, Central Point, and SkySawa were delivered to the Warsaw market. From 2023 until the end of 2024, we will witness a supply gap in Warsaw. However, in contrast to the situation in the capital, we will witness high activity of developers on regional office markets, with 2023 being rich in significant new projects commissioned, including Ocean Office Park B in Krakow and New Market E in Poznań.
Post-covid demand remains strong
According to preliminary data from AXI IMMO summarizing 2023; gross demand in the Polish office market will remain at a level of around 1.5 million sq.m for the second year in a row. However, the structure of demand will differ: in 2022, more contracts were signed in Warsaw, while in 2023, tenants more frequently opted for new contracts, renegotiations, and office space expansions in the regions.
Remote/hybrid work in the Labor Code
The amendment to the Labor Code regarding so-called remote and hybrid work, predicted since the COVID-19 pandemic, has influenced the consideration of new forms of employment and the determination of rules and requirements for employers and employees. Since April 2023, a large number of companies have permanently switched to a mixed work model that combines office work with a rotational system individually set for each employee.
Smart solutions in office buildings
The COVID-19 pandemic was a prelude to changes in the organization of workspaces and the way we use office buildings. Prop-tech, the combination of the real estate market with the latest IoT solutions, introduced several applications for moving within office buildings in 2023.
Environmentally Conscious ESG
The increase in sustainability awareness among tenants and developers is leading to an increase in certified buildings meeting environmental standards. In 2023, many companies were looking for spaces meeting ESG requirements.
New supply – several scenarios
According to AXI IMMO’s estimated data, at the end of December 2023, about 540,000 sq.m will remain under construction in the Polish office market. This includes projects like The Bridge, Biurowiec B as part of the multifunctional Towarowa 22 project, Studio A, Skyliner II, and The Form.
However, in the context of limited availability of office space in Warsaw’s most attractive locations, AXI IMMO analysts expect pressure on higher rents in “prime” properties. In recent quarters, rental rates have remained stable, but service fees have significantly increased.
