Despite the pandemic, demand on Poland’s largest regional markets from January to September was 11% lower year-on-year. However, due to the current situation, many tenants are temporarily postponing expansion plans and relocation decisions.
Demand
Since the beginning of the year demand for office space outside Warsaw was almost 460,000 sqm, 11% lower than the corresponding period in 2019. Tenants in the Wrocław, Łódź and the Tri-City markets saw the greatest activity, achieving 66%, 46% and 11% better year-on-year results in take-up respectively. It is also worth mentioning that 43% of the total take-up volume and eleven out of the fifteen largest transactions in the analysed period were contracts signed by technology companies.
comments Karol Patynowski, Director of Regional Markets, JLL
Due to the current situation, companies often decide to renew their leases rather than relocate. Moreover, the increasing volume of office space offered for sublease is currently one of the most visible trends on Poland’s office market. Approximately 116,000 sqm of such supply are in the major office markets outside Warsaw, with 30% being located in Wrocław, followed by the Tri-City with 23% and Kraków with 22%.
adds Karol Patynowski
Supply
In the first three quarters of 2020, approx. 540,000 sqm was delivered to the Polish office market, including over 305,000 sqm in the regions. It is worth noting that in the markets outside the capital city, 42% of the space was completed in the third quarter alone. In Poland, there is currently approx. 1.3 million sqm under construction, including nearly 700,000 sqm of space being delivered outside Warsaw. This is less than before the outbreak of the pandemic, which is mainly due to the fact that developers are so far not starting new investments.
comments Hanna Dąbrowska, Research Analyst, JLL
Investment market
26 office transactions worth over EUR 1.54 billion were finalized between January and September. It was the sector’s third highest volume on record for the first nine months of the year. Outside Warsaw, where investors were most active during this time, Kraków, Katowice and Wroclaw also enjoyed great interest. The Q3 performance shows a slight slowdown which, among other things, is linked to the restrictions in travel. We expect, however, that the postponed transactions will recommence over the upcoming months, and should be reflected in the 2021 results.
comments Tomasz Puch, Head of Office and Industrial Investment, JLL
