The pandemic has translated into a more cautious approach on the market along with lower office demand. Although office development in Poland is at its lowest level for eight years, regional markets are holding their ground with 800,000 sqm under construction.
Demand – IT leads the pack
In the major office markets outside of Warsaw*, demand in Q1 totalled 98,300 sqm, with tenants at their most active in Tri-City, Kraków and Wrocław. Interestingly, renegotiations made up 45% of total activity in the regional cities,
explains Karol Patynowski, Director of Regional Markets, JLL.
Although many companies in Poland are holding back on final decisions regarding changes to their office portfolio due to the pandemic, we are seeing some recovery in this area and the laying out of strategies for the new normal. For example, in the last few months JLL, has acquired new tenant representation projects for approx.70,000 sqm. About 25-30% of this number are enquiries from newcomers, mainly from the business services, IT and medical sectors, or companies expanding their scope,
adds Karol Patynowski.
Supply – 200,000 sqm under construction in Katowice
Currently around 1.2 million sqm is under construction in Poland – the market’s lowest level since 2013. In Warsaw, it is 420 000 sqm, which is the city’s lowest result since 2010. Interestingly, developer activity in regional markets remains robust, with 800,000 sqm under construction at the end of Q1. The most impressive regional performance is seen in Katowice with 200,000 sqm in the pipeline,
says Ewa Grudzień, Senior Research Analyst, JLL.
Office investment market – record-breaking regions
Despite the pandemic, office investor activity remains high. In Q1 2021, the value of office investment transactions was around 605 million EUR, with regional markets accounting for almost 360 million EUR. This is the best ever start to a year by the country’s regional cities. Such a spectacular result was achieved due to the sale of an office building portfolio in Kraków and Wrocław by the Buma Group to Partners Group for over 200 million EUR. Other significant transactions included the sale of Alchemia Neon office building in Gdańsk by Torus to the DWS fund for over EUR 80 million, as well as the acquisition of Brama Portowa in Szczecin by FLE from Vastint,
says Tomasz Puch, Head of Capital Markets, JLL.
Vacancy and rents
*In Kraków, Wrocław, Tricity, Katowice, Poznań, Łódź, Lublin, Szczecin
