FM newsroom – office, Poland. In Q3 2024, Poland’s regional office markets showed signs of stabilization, though high vacancy rates continued to pose challenges for new developments. The total office stock across eight major regional cities reached 6.73 million sqm, with Kraków leading at 1.82 million sqm, followed by Wrocław (1.37 million sqm) and Tricity (1.06 million sqm), according to BNP Paribas Real Estate.
Vacancy rate stabilization
Poland’s overall vacancy rate stabilized at 17.3% by the end of Q3 2024, reflecting a 0.4 percentage point decline quarter-on-quarter but remaining essentially unchanged year-on-year. Key cities like Łódź, Poznań, and Kraków saw the most significant reductions in office availability, while Wrocław experienced a slight increase. Łódź had the highest vacancy rate at 21.1%, whereas Szczecin recorded the lowest at 6.8%.
Office buildings over a decade old contributed significantly to long-term vacant stock, highlighting the need for modernization to meet current market demands. BNP Paribas Real Estate anticipates that unoccupied office space will gradually be absorbed over the next three to five years.
Significant transactions in regional markets
Office take-up in Q3 2024 reached 223,000 sqm, marking a 54% quarter-on-quarter increase and a 13% rise year-on-year. The strongest leasing activity occurred in Kraków (85,000 sqm), Wrocław (43,000 sqm), and Tricity (40,000 sqm). Demand was primarily driven by renewals, which accounted for 53% of transactions, with new leases and expansions making up 43% and 4%, respectively. IT companies emerged as the dominant occupiers in 2024.
Several significant transactions underlined market activity during the quarter. The largest was a 16,000 sqm lease renewal by a confidential tenant at Kapelanka 42 A in Kraków. Other major deals included State Street Bank’s 10,000 sqm lease renewal in Gdansk’s Alchemia II and Rossmann’s 8,000 sqm lease in Łódź’s Teofilów Business Park C.
Impact on rental rates
Development activity in regional markets remained subdued, with 286,000 sqm of office space under construction and set for completion between 2024 and 2026. Key projects include Cavatina’s Quorum Office Park B in Wrocław (53,000 sqm) and Von der Heyden Group’s AND2 in Poznań (37,000 sqm).
Despite limited new supply, prime office rents remained stable, ranging from €11.5 to €18.0 per sqm per month, depending on building location and quality. However, experts predict growing pressure on rental rates due to declining vacancy rates and limited new developments. According to experts from BNP Paribas Real Estate Poland, longer leases for five to ten years are becoming increasingly common in new office buildings, driven by high fit-out costs. Meanwhile, older buildings tend to offer more flexible lease terms: two to five years for renewals and three to five years for new leases.
Challenges for Developers
Q3 2024 saw the completion of just 15,400 sqm of new office space, including Vastint’s Waterfront II in Gdynia (14,500 sqm). Year-to-date, regional markets have added nearly 77,000 sqm of office space. Developers remain cautious, with many repurposing planned projects for residential or mixed-use developments to address market uncertainties.
“The trend towards office space consolidation and optimization is accelerating. Companies are prioritizing modern, flexible offices to meet workforce needs, which is increasingly critical in the war for talent spreading into regional markets.”- Jan Pawlik, Workplace Management Director, ISS Facility Management told Property Forum.
Image: modzelewskirodek.com.pl
