JLL consulting company sums up the Polish office market situation at the end of the first half of 2018. The supply exceeded 10 million sq. m and there are 1.8 million sq. m under construction, 1.1 million sq. m of which are situated outside Warsaw.
The Polish cities grow dynamically and the commercial real estate sector constitutes a crucial element of this change. Benefits from creating new public spaces are becoming more and more important for developers who feel the need to influence the process of developing and evolving their cities. Some of the new projects, especially multi-use, contribute to revitalization of a given area, for instance, Monopolis in Łódź, Nowy Rynek in Poznań or Unity Center in Krakow. The actions of developers and city authorities boost development of a given area, thanks to which it becomes an attractive place for companies which responds to the expectations of the local community. This different approach to new projects results from the growing awareness, requirements of tenants and competition between developers – says Karol Patynowski, Head of Regional Markets, JLL.
Demand Is Still Strong
Nowadays, office space in Poland is very attractive to tenants. The office market demand amounted to 686 500 sq. m at the end of the first half of 2018, including 40% for the main markets outside Warsaw. The leader is Krakow. The capital of Little Poland still arouses the greatest interest among investors, especially from the business services and banking sectors. It is also worth pointing out Wrocław and Poznań. The latter one is currently responsible for 14% of the demand in the regions. The total demand on the main office markets outside the capital amounted to 261 800 sq. m at the end of the first half of 2018. This pace will be probably maintained at the same level in the second half of the year – says Karol Patynowski.
The largest lease contracts concluded in the first six months of 2018 are: lease of 17 000 sq. m by BZ WBK in the own office building (Wrocław), lease of 14 800 sq. m by the Polish Financial Supervision Authority in the Piękna 2.0 office building (Warsaw), lease of 14 800 sq. m by BZ WBK in Business Garden Poznań and lease of 13 500 sq. m by Cambridge Innovation Center in Varso II (Warsaw).
Developers: Increased Activity
In the first half of this year 430 000 sq. m of office space were completed, 256 100 sq. m of which are situated outside the capital. There are currently 1.8 million sq. m of offices under construction. The office market exceeded 10 million sq. m of office space. The regions are especially active. The developers delivered 36% more modern space to the main business centers than in the analogical period last year. The supply exceeded 1 million sq. m in Wrocław. The overwhelming majority of new buildings are executed in Krakow and Tricity. These three locations are responsible for 70% of the executed new supply volume but the increased activity of the developers may be observed all over Poland – says Łukasz Dziedzic, Market Analyst, JLL.
Interestingly, three largest office projects commissioned in the first six months of this year are situated outside Warsaw, for instance, the office tower of Olivia Star in Tricity. This is the highest building in northern Poland and offers 45 700 sq. m. Two other investments are Sagittarius Business House in Wrocław (24 900 sq. m) and Krakow’s High5ive – buildings 1 and 2 (20 600 sq. m).
Rent Rates And Vacant Offices
There are still ca. 10.2% of vacant office space in Poland. According to data collected by JLL, the vacancy level amounts to 11.1% in Warsaw, and 9.3% – outside the capital. The largest proportion of vacant buildings may be observed in Lublin (19.7%), whereas the lowest – in Tricity (6.7%).
The price of any office in Poland certainly depends on its location. According to JLL, the lease rates in the city center of Warsaw currently amount to 17.0-23.0 euro/sq. m/month and 11.0-15.0 euro/sq. m/ month. The highest transaction rates outside the capital are recorded in Krakow (13.5-14.6 euro/sq. m/month), Wrocław (13.7-14.5 euro/sq. m/month) and Poznań (13.5-14.5 euro/sq. m/month), whereas the lowest are recorded in Lublin (10.5-11.5 euro/sq. m/month).