Advisory company JLL summarizes the situation on the Polish office market in H1 2021.
As a result of the further lifting of restrictions combined with a mass vaccination campaign, cautious optimism is returning to the market. In Q2, companies leased nearly 70% more office space in the country’s major regional markets than in the first quarter of 2021. Demand outside Warsaw exceeded 264,000 sqm. The highest tenant activity was recorded in Kraków (74,100 sqm), Tri-City (72,200 sqm) and Wrocław (45,900 sqm). IT and modern business services companies continue to lead the rental field,
explains Karol Patynowski, Director of Regional Markets, JLL.
The share of renegotiations remained relatively high at 46% with pre-lets only making up 10% of total activity in the regional markets. This illustrates the rather conservative attitude of tenants towards making strategic decisions regarding their real estate portfolio. However, we are now having a lot of discussions with tenants who would like, in the coming months, to make informed and data-driven decisions about the development of office locations and formats,
adds Karol Patynowski.
At the end of Q2, over 168,000 sqm was available for sublet outside Warsaw, 54% of which was located in Wrocław, Kraków and Tri-City. In total, there is approximately 300,000 sqm available for sublease in Poland,
says Ewa Grudzień, Senior Research Analyst, JLL.
Supply – 760,000 sqm under construction outside Warsaw
Developer activity outside Warsaw remains strong, and in fact at a higher level than in the capital. A further 760,000 sqm, which is under construction in the country’s eight major regional markets, is scheduled to be delivered by the end of 2023. The highest levels of development activity are currently being seen in Wrocław, Katowice and Tri-City,
comments Ewa Grudzień.
Vacancies and rents
Investment market
Outside Warsaw, the total value of office investment transactions was a moderate €375 million – still 10% higher than the H1 average of the last decade. Poland's largest office deal concluded in the first six months of 2021, was the sale of Buma Group's portfolio in Kraków and Wrocław for approximately €200 million to Partners Group. Almost 50% of regional investment activity was in Kraków, with 27% in Tri-City, including Torus’ sale of its Alchemia Neon in Gdańsk. Given the transactions currently in the pipeline, we estimate that total office volumes for this year should be close to 2020’s result,
says Marcin Sulewski, Head of Office Investment, JLL.
[1] The main office markets outside Warsaw include Kraków, Wrocław, Tri-City, Katowice, Poznań, Łódź, Szczecin and Lublin.
