Warsaw is the leader in terms of the amount of new office space delivered between July and September 2020. Developers completed six projects in this market, with a total GLA of 131,500 sqm. The largest of those is the Warsaw HUB complex (Ghelamco, 89,000 sqm), Biura przy Warzelni building (Echo Investment, 24,000 sqm) and The Park 7 (White Star RE, 10,000 sqm). In the regions, only four out of eight markets saw new space delivered in Q3, with combined GLA of 129,500 sqm. The largest amount of space was delivered in Wrocław (48,900 sqm), followed by Kraków (38,200 sqm), Tricity (30,400 sqm) and Łódź (12,000 sqm). In total, since the beginning of the year, approx. 231,600 sqm has been delivered in Warsaw, while over 305,000 sqm has been completed in the main regional markets. Kraków is leading the way among the regions, with 107,300 sqm completed so far this year, followed by Tricity (60,300 sqm) and Wrocław (57,200 sqm). Due to the new supply, at the end of Q3 2020, the total stock of office space in Poland reached approx. 11.5m sqm. Warsaw remains the largest market (5,822,400 sqm) and it size is larger than the combined office stock of the regional markets (approx. 5.7 million sqm). Kraków is Poland’s number two office market (1,521,400 sqm), with Wrocław in the second spot (1,235,000 sqm) and the Tri-City in the third (898,800 sqm).

„In line with our earlier forecasts, the office market is undergoing a number of changes as a result of the COVID-19 pandemic, both in terms of demand and supply. First of all, we can see ongoing changes in the field of remote working, which affect tenants' decisions regarding the length of contracts and above all the type of contracts. Expansion and relocation plans are postponed. Secondly, we are seeing an expanding offer of space for rent on a sub-let basis in all markets. At the end of Q2 2020, we indicated that the availability of this type of offer in Warsaw accounted for approx. 1% of this market’s total stock, and today it is already approx. 1.5%. Thirdly, a growing number of companies are now considering flexible and temporary leasing arrangements. Finally, until the market calms down, we expect that most of the new projects planned for the coming years will be put on hold until the existing schemes become at least 70% leased up,” points out Martin Lipiński, Head of Office Agency and Tenant Representation, Axi Immo.

At the end of September 2020, the volume of office space available to let immediately in Poland amounted to 1,238,800 sqm (10.7% of stock). The largest amount of space for rent is available in Warsaw (559,200 sqm), followed by Kraków (188,800 sqm), Wrocław (176 500 sqm) and the Tri-City (84 700 sqm). Availability of space in all regional markets amounted to 679,600 sqm at the end of the third quarter, up by approx. 108,000 sqm since the end of Q2. Wrocław recorded the highest increase in availability in Q3 (43,800 sqm), followed by Tricity (32,100 sqm) and Kraków (24,400 sqm). In percentage terms, the vacancy rate in the capital reached 9.6% (+1.7 bps q/q and +1.4 bps y/y) and in the regions, it stood at 11.9% (+1.7 pp. q/q). The highest vacancy rate in the regions was recorded in Łódź and Wrocław (14.3%), Poznań (13.3%), Kraków (12.4%) and Lublin (10.4%), while the lowest vacancy rate is in Katowice (7.0%), Szczecin (7.3%), Tricity (9%) and Warsaw (9.6%).

„To sum up, the current situation on the market is good for all companies that have been contemplating whether renting office space in an office building is a solution tailored to their needs. Taking advantage of the sub-let offer may significantly influence their future decisions on structural development. Our experience shows that tenants who decided to trial work in a flexible office space or as part of project teams at a client's office subsequently decided to relocate their business from an apartment or house to a small office in an office building. The change resulted in better organization of work and improved productivity as well as increased prestige due to the presence of other companies in the same building,” adds Martin Lipinski.

In the third quarter of 2020, the volume of all leasing transactions on the Polish office market amounted to 239,500 sqm. In Warsaw, 113,200 sqm was leased between July and September (-40% y/y). Meanwhile, in the regions, contracts for a total of 126,300 sqm were signed. The highest tenant activity among the regional markets was recorded in Wrocław (46,200 sqm), Tricity (30,400 sqm) and Kraków (25,300 sqm). When looking at activity since the start of the year, almost 447,500 sqm has been leased in Warsaw, which is slightly behind the combined take-up in the regions (459,500 sqm). Among the regional markets, the highest take-up thus far in 2020 was recorded in Kraków (140,000 sqm), followed by Wrocław (108,800 sqm) and the Tri-City (82,100 sqm). In the third quarter, the volume of new contracts (including pre-lets) in Warsaw was at a similar level to renewals and renegotiations (47.9% vs 47.6%), while expansions accounted for just 4.5% of take-up. Meanwhile, in the regions, renewals accounted for 52% of leased space, followed by new contracts (31%) and expansions (17%).