• In 2019, Łódź saw eight office completions totalling 60,700 sqm.
• Gross take-up hit 53,500 sqm, down by 6% on 2018.
• The city’s vacancy rate stood at 11.2% at the end of 2019, up by 2.5 pp compared to where it was at the end of 2018.
• Prime headline rents stand at €13.5/sqm/month.
• In 2020, office supply will exceed the previous year’s level for the first time in four years.

At the end of 2019, office space in Łódź amounted to 528,300 sqm. Eight completions totalled 60,700 sqm in the last 12 months. The key projects completed were the first phase of Skanska’s Brama Miasta (25,500 sqm), Avestus’ Imagine (14,780 sqm) and Virako’s first building of the Monopolis complex (6,990 sqm).

“In the last four years, new supply surpassed the 60,000 sqm mark once every two years only to drop to 35,000 sqm in alternate years. In 2020, new office supply will exceed the previous year’s level for the first time in four years,” says Jan Szulborski, Senior Consultant, Cushman& Wakefield.

More than 90,000 sqm of office space is currently under construction in Łódź. Of that total, 81,000 sqm will be delivered across 12 new office buildings in 2020. The largest projects due for completion this year include Master Management Group’s HiPiotrkowska (25,000 sqm), Echo Investment’s The React(15,500 sqm) and the second phase of Skanska’s Brama Miasta (13,800 sqm).

“Łódź offers a variety of office spaces, not only in newly-built schemes and projects underway, but also in grade B office buildings. Developers have secured development lands, but require pre-lets to commence construction. Supply continues to outstrip occupier demand,” says Zuzanna Krech, Regional Head, Office Agency, Cushman & Wakefield.

Take-up

In 2019, office take-up reached 53,500 sqm, down by 6% on 2018’s level. Leasing activity was comparable with the total take-up for the last five years which ranged between 56,000–66,000 sqm. New leases accounted for 63% of all deals, while renegotiations and expansions made up 29% and 8%, respectively. In addition, pre-lets accounted for approximately 52% of the total leasing volume.

The largest transactions of 2019 in Łódź were New Work’s pre-let of 4,950 sqm in Hi Piotrkowska, the renegotiation of mBank’s lease for 4,500 sqm in Teofilów Business Park C, and Nordea Operations Center’s new lease for 3,280 sqm in the Red Tower.

“Łódź’s office market is largely driven by tenants from the business services sector. According to ABSL’s data, Łódź saw six new shared services centres open every year in 2018–2019. At the end of Q1 2019, Łódź had 85 shared services centres. The number of new centres is comparable with that for Poznań and Katowice,” says Jan Szulborski.

Vacancies

Łódź’s vacancy rate edged up by 2.5 pp to 11.2% at the end of 2019, equating to 59,200 sqm of unoccupied office space.

Leasing activity in 2019 was similar to that posted in previous years. Absorption, however, reached 40,900 sqm, up by approximately 21% on the previous year’s level but was lower than the new supply in the last 12 months.

Rents

Prime headline rents stood at €13.50/sqm/month. Despite the relatively large volume of new supply scheduled for delivery in the next 12 months, prime rental rates are expected to hold firm.

"Łódź’s office market is growing by the year. Revitalisations attract strong interest from the local workforce, which is a major driver of the market. Such projects are a fundamental feature of Łódź, which will continue to develop in that direction,” says Zuzanna Krech.