The Warsaw office market faces an almost complete halt in new supply in the coming months, which will continue to drive rent increases, according to JLL Poland.
During Q1, total transaction volume reached 133,800 sqm, which is 8.8% less compared to the same period last year. Renegotiations accounted for 39% of all signed contracts, confirming companies' continued activity in optimising and securing current locations.
"Tenants remain active, particularly for high-quality space in central locations - around 43% of transaction volume in the first quarter was concentrated exclusively in the Centre zone. However, limited availability of modern offices is becoming a problem," says Ida Stankiewicz, Head of Tenant Representation at JLL. "The challenge for tenants is the divergence between market pace and internal decision-making pace in companies. We observe a clear paradox: at a time when companies still haven't finished experimenting with hybrid work policies and need more time to determine real demand for office space, the market gives them less time to make decisions."
In Q1, over 40,000 sqm of office space was delivered to the Warsaw market. The only project completed outside the city centre was the Vena investment located in the West zone. With the delivery of new supply, the vacancy rate in Warsaw rose slightly to 9.5% (vs 9.1% a quarter earlier, and recorded a 1 percentage point decrease year-on-year). In the city centre, the vacancy level remains lower at just 6.5%, while outside the centre it reaches 12.2%.
JLL experts emphasise that the increase in availability is temporary. "A significant part of the new space has already been secured by tenants or is subject to advanced negotiations. This means that the current increase in vacancies does not change the long-term market picture, which remains a market of limited supply," comments Piotr Kamiński, Head of Office Leasing at JLL Poland.
Developers remain cautious - only five projects with a total area of 114,000 sqm are currently under construction, which remains at a level lower than historical averages for Warsaw. Decreasing space availability and minimal new supply planned for the coming months translate into further increases in rental rates. Currently, rents for the best offices in central Warsaw exceed €29 per sqm monthly, which is close to historical records from about 20 years ago.
