2022 sees an uplift in office occupier activity

At that time, however, Poland’s office stock was three times smaller than today. In 2022, the Polish office market owed its strength to transactions finalized by tenants with a long-standing presence in Poland. Despite the lack of a common decision-making pattern for organisations, they helped the market emerge from a period of destabilisation unscathed. Occupier activity comprising renegotiations, expansions and relocations amounted to over 1.4 million sq m, on a par with the results recorded in the last eight years. Contrary to appearances, absorption was by no means low as the volume of new leases and expansions was only 10% shy of the pre-pandemic level, which bodes well for the coming quarters. A number of interesting developments are on the cards for this year and in the next years as the market continues on its path to further stabilisation. Most importantly, they include differences between individual city office markets and the expected slowdown in supply growth in Warsaw in 2023 and in regional cities in 2024. Office rents are expected to rise further this year, with rental growth most notable in central locations and impacting the dynamics of the whole market,

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

The robust office take-up in Warsaw was powered by several factors: both the accumulation of large-scale deals by tenants from the financial, business services and IT sectors and the overall growth in occupier demand for modern office space. The strong leasing activity in regional cities was driven by the continued expansion of the business services sector, which accounts for a substantial proportion of tenants there,

comments Katarzyna Lipka, Head of Consulting and Research, Cushman & Wakefield.

The subdued development activity in regional cities has been caused by rising office construction and fit-out costs and the overall economic downturn in Poland and globally. Looking ahead, we anticipate new office supply in regional cities to total 330,000 sq m in 2023, 20% lower than the average for the last five years. This is likely to spark a supply gap in regional cities in 2024, about 12 months later than in Warsaw,

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

We have observed that projects in the pipeline are currently experiencing the strongest upward pressure on office rents due to their significant exposure to rising construction and fit-out costs. This will cause landlords to rethink their pricing strategies depending on the location, quality and occupancy levels of their building portfolios,

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