Only 31,000 sqm of new supply was delivered through two projects during the three months to March 2024, bringing the combined office stock of Poland’s eight largest regional cities to 6.7 million sqm at the end of the first quarter, say BNP Paribas Real Estate experts. The new completions were Echo Investment’s Brain Park C (13,000 sqm) in Kraków, which is the second largest office market in Poland after Warsaw, and Cavatina Holding’s Quorum Office Park A (18,000 sqm) in Wrocław – the third biggest.

According to the latest report published by Newmark Polska, during the first three months of 2024, Poland’s regional city office markets experienced moderate occupier demand, with regearing accounting for most of total take-up. In addition, while the overall regional vacancy rate rose to nearly 18%, development activity was more muted and focused on three cities: Katowice, Poznań and Wrocław, which contain 75% of the office stock under construction.

In 2023, on Poland’s largest eight regional office markets, developers delivered 280,000 sqm (-31% y/y). It’s bringing the sector’s total stock to 6.68 million sqm (+4% y/y). The new supply slightly increased the vacancy rate, stabilizing around 17.5% (+2.2 pp. y/y) at the end of December 2023. The largest concentration of tenant activity was observed in the largest regional office markets, i.e., Kraków, Wrocław, and the Tricity (about 70% of gross demand), where, in total, companies leased about 520,000 sqm out of 750,000 sqm of all signed contracts in 2023, says Axi Immo.

Although the office development pipeline in Poland’s eight largest regional city markets is clearly shrinking, it is still above that for Warsaw, says BNP Paribas Real Estate Poland in its laterst report. Another notable development of the last quarter of 2023 was that the overall regional vacancy rate hit an all-time high by the end of December.

According to a recent report published by Newmark Polska, total office take-up in 2023 in the largest Polish regional cities surpassed 741,300 sqm - an increase of almost 19% year-on-year and 7% from the pre-pandemic 2019 peak. Meanwhile, issues related to ESG, functionality improvements, efficient office space management and optimisation of lease costs have filtered through into the vocabulary and strategies of tenants and developers alike.

Interest in leasing offices in Poland is growing. In the third quarter, both in Warsaw and on the regional markets, the demand for office space was the highest this year. In the regions, 2023 will close with a result similar to the record from 2019. 

New office supply reached nearly 236,000 sqm in Poland’s key regional cities in Q1-Q3 2023, says Savills. Gross take-up for the same period amounted to over 531,000 sqm, an increase of 19% year-on-year.

According to the newest report by Newmark Polska, in the third quarter of 2023, office take-up in Poland’s regional city office markets reached nearly 200,000 sqm, while the development pipeline was below 400,000 sqm. High vacancy rates in existing office buildings mean that tenants have a wide choice of options. Both developers and tenants remain focused on ESG, functionality, flexibility and optimisation of office usage and lease costs.

Total demand for office space on regional markets in the first half of the year was similar to last year’s level, but there were more vacant offices in all major markets, except Warsaw. Warsaw recorded a 30 percent decrease in demand for offices, and yet the vacancy rate decreased. Only a few office projects are being implemented across Poland, says Walter Herz. 

According to a report published by Newmark Polska, occupier activity in Poland’s regional city office markets remains stable, but tenants are increasingly shifting their focus towards making efficient use of office space and looking for better quality offices.