Demand in regional cities gradually recovers amid rising rental and vacancy rates

In the six months to June 2023, leasing activity in Poland’s regional city office markets remained relatively solid at around 334,000 sq m, down by only 2% from its very strong performance in the first half of last year. The tenants I talk to frequently complain about the actual utilization of office space by employees. Many companies have downsized their offices and some have decided not to take additional space despite rising headcounts. Analysis of macro data therefore seems all the more interesting as it shows that the gradual recovery in demand for office space in regional cities continues,

Michał Galimski, Partner, Head of Regional Markets, Cushman & Wakefield.

The first half of 2023 saw relatively few office completions - the top three markets for new office supply were Krakow, Wrocław and Tricity,

comments Vitalii Arkhypenko, Office Market Expert, Cushman & Wakefield.

Poland’s office development pipeline has shrunk considerably over the last three years. Although construction activity has bounced back to a degree with new office starts in the capital and regional cities, this downturn continues and is most pronounced in Warsaw, where only approximately 221,000 sq m is under way. Office stock under construction in regional cities stands at approximately 450,000 sq m compared to the pre-pandemic 850,000 sq m,

says Ewa Derlatka-Chilewicz, Head of Research at Cushman & Wakefield.

Average prime office rents in central locations in regional cities stood at EUR 12.50-16.50/sq m/month, with rental growth reported in the year to date for new office completions in particular,

concludes Jan Szulborski, Office Market Expert, Cushman & Wakefield.