Supply: Slower supply growth as the office development pipeline shrinks by 75%

At the end of the third quarter of 2024, the combined office stock of Poland’s nine largest markets exceeded 13 million sqm.   

"Total new office supply in the year to date reached nearly 152,000 sqm, most of which was delivered in Warsaw, Wrocław and Krakow. However, the pace of office deliveries across Poland has slowed steadily over the past three years. Although a handful of office projects have broken ground, development activity remains subdued. For example, there is only around 210,000 sqm under construction in Warsaw, while the office development pipeline in regional cities stands at just over 200,000 sqm, accounting for only 25% of the pre-pandemic volume", comments Ewa Derlatka-Chilewicz, Head of Research Poland, Cushman & Wakefield.

The largest office completions in the year to date include Cavatina Holding’s Quorum Office Park A in Wrocław (18,200 sqm), Yareal’s Lixa E in Warsaw (16,900 sqm), the refurbishment of CA IMMO’s Saski Crescent in Warsaw (15,500 sqm), and Ghelamco’s Vibe I in Warsaw (15,000 sqm).

"Cushman & Wakefield estimates that another 70,000 sqm of office space will be delivered across Poland by the end of 2024. New supply in 2025 is expected to reach approximately 220,000 sqm, a figure comparable to this year’s, with an uptick in development activity unlikely before 2026", adds Vitalii Arkhypenko, Market Analyst, Cushman & Wakefield.

Take-Up: Leasing activity is comparable to last year’s

"In the first three quarters of 2024, total leasing activity in Warsaw amounted to 492,200 sqm, a figure comparable to that posted in the same period last year. This is attributed to a gradual stabilization of the office rental market and a trend among tenants to optimize their office footprints", explains Jan Szulborski, Business Development & Insight Manager, Cushman & Wakefield.

From January to September 2024, new leases dominated the structure of demand in Warsaw, accounting for approximately 44% of all transactions, while owner-occupier deals made up 7%. Additionally, renewals represented a significant share at 42%, with expansions contributing around 7% to the total leasing volume.

"Leasing activity in regional cities amounted to just over half a million square metres, down by a mere 4% from the same period in 2023 when regional office take-up hit a record high. Demand continued to come predominantly from IT, services and manufacturing. Renewals accounted for the largest share of the transaction volume at 53%, while new leases and expansions made up 43% and 4% respectively", comments Michał Galimski, Partner, Head of Regional Markets, Cushman & Wakefield. 

Vacancies: Vacancy rates remain stable but are likely to edge down

At the end of the third quarter of 2024, Poland’s average vacancy rate was 14.1%, up by 0.1 pp year-on-year but down by 0.3 pp from the previous quarter. Warsaw’s vacancy ratio stood at 10.7%, a decrease of 0.2 pp compared to where it was in the previous quarter.

Among the regional cities, Łódź, Poznań and Krakow recorded the largest drops in vacancies, with Wrocław seeing the biggest increase. This brought the average regional city vacancy rate down to 17.3% at the end of September. Office availability in all the surveyed markets amounted to 1.84 million sqm, representing a 2% increase year-on-year.

Rents: Rental rates remain largely unchanged

In the third quarter of 2024, prime office rents in Warsaw stood at €22.00-26.00/sqm/month in the Centre and at €13.50-16.50/sqm/month in non-central locations. Average prime office rents in central locations in regional cities were €12.50-16.50/sqm/month, with new office projects and buildings in prime locations commanding above-average rental rates.