Poland office market: The trend towards leasing extra space just in case is over

FM newsroom – Poland, office market. According to the report issued by BNP Paribas, the office development pipeline in the largest city markets of Poland is shrinking, except for Warsaw. Most companies have downsized their offices and transformed them prioritizing facilities improving employee wellbeing.


According to the Regional City Office Markets Q4 2023 report issued by BNP Paribas Real Estate Poland the office development pipeline in the country’s largest city markets is shrinking, except for Warsaw. At the end of 2023, the combined office stock of Poland’s eight largest regional cities outside Warsaw stood at nearly 6.67 mln sqm. Almost 280,000 sqm of new office space was delivered in the region last year through 21 completions. The fourth quarter saw the biggest projects delivered in Kraków (Mogilska 35 Office and The Park Kraków II) and in Poznań (the new headquarters of Tetos).


According to reports from developers, 367,000 sqm of new office space is scheduled for completion in Poland’s eight key regional cities, Krakow, Wrocław, Tricity, Katowice, Poznań, Łódź, Lublin, and Szczecin, in 2024-2026 compared to only 238,000 sqm in Warsaw. BNP Paribas Real Estate Poland notes that the market situation is dynamic and the falling supply of office space is likely to accelerate the launch of new projects. 


Office spaces have transformed

Most companies have downsized their offices by around 20-30 % over the last two to three years compared to pre-pandemic office lease sizes as many have embraced hybrid working patterns.


Office spaces have transformed. To encourage employees to return to the office, companies are increasingly prioritizing facilities to improve employee well-being. Most amenities focus on the physical or mental aspect of well-being and include chillout rooms, access to fresh air and silent spaces for reflection. In addition, employees going back to the office also expect access to catering, fitness and healthcare services in an office building, as well as free meals. – Agnieszka Witkowska, consultant, tenant representation, office agency, BNP Paribas Real Estate Poland told EurobuildCEE.com.


Vacancy hit an all-time high

Meanwhile, vacancy rates in existing office buildings in the eight key regional markets hit all-time highs by the end of 2023. Space available for immediate occupancy accounted for approximately 17.5 % of total office stock. The highest vacancy rate of 21.5 % was recorded in Katowice, with the lowest of 4.8 % in Szczecin.


As Dorota Mielke, associate director at BNP Paribas Real Estate Poland pointed out: the trend towards leasing extra space just in case is over. The expert also highlighted that office optimization has also resulted in a decline in the average lease size, which was 938 sqm at the end of 2023, down from 996 sqm in the previous year. Occupier activity in 2024 is expected to depend on the overall macroeconomic situation and corporate expansion plans, and companies are expected to focus on ensuring ESG compliance.


Leasing activity continued unabated

The report on regional office stock in the fourth quarter of 2023 shows that gross office take-up for October-December 2023 reached 219,100 sqm, up by 11 % compared with the previous quarter. The strongest occupier activity was in Kraków (80,200 sqm), Wrocław (43,300 sqm) and Poznań (27,700 sqm). Analysis of last year’s total take-up figures reveals that leasing activity continued unabated, with more than 750,000 sqm transacted in 2023 as a whole, a 20 % increase from the previous year.


Photo: mogilska35-office.com


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