INVESTMENTS
An analysis of the office market in a shifting landscape: availability and occupier demand Text | Jan Szulborski
At the end of 2021, Poland’s total office stock stood at 12.2 million sq m, having grown by approximately 1.25 million sq m in 2020-2021. The Polish office market comprises Warsaw and eight regional cities: Krakow, Wrocław, Tricity, Katowice, Poznań, Łódź, Lublin and Szczecin. With over 50% of the nation’s total stock concentrated in the capital city, Warsaw is the largest office market in Poland. The biggest regional city office markets include Krakow (13%), Wrocław (10%) and Tricity (8%).
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In March 2020, the Polish office market
ARE WE AT RISK OF AN UNDERSUPPLY?
time thanks to high pre-let levels. Due to
found itself at the epicentre of changes
At the end of 2019, Poland’s office devel
economic uncertainty and the more sub
spurred by the coronavirus pandemic,
opment pipeline comprised 89 projects
dued demand for office space as tenants
successive lockdowns and the rise of
with a combined area of 1.6 million sq
temporarily shelved expansion plans,
remote working. These factors impacted
m, most of which were under construc
new projects planned for 2020-2021 were
Warsaw and regional cities alike. The ex
tion in Warsaw (28 projects), Krakow (13),
mothballed, which in the longer term will
tent of the impact, however, varied from
Tricity (15), Łódź (10) and Katowice (10).
result in an undersupply in 2023-2025.
market to market and largely depended
Of that total, more than 68% are projects
The number of projects breaking
on the growth phase of each at the out
sized over 10,000 sq m. The volume of
ground has fallen since 2019. At the end
break of the COVID-19 pandemic.
space under construction was in line with
of 2021, the development pipeline in
the historically high demand for office
the largest Polish cities stood at 980,000
WARSAW AND REGIONAL CITIES
space and the continued influx of invest
sq m of office space which was schedu
Warsaw saw a record level of occupier
ments into the business services sector
led for completion in 2021–2024. Cush
demand in 2019 with over 877,000 sq m of
in Poland.
man & Wakefield estimates that 2022’s
office transactions – the highest result in
The first case of COVID-19 in Poland
new office supply will amount to 750,000
its history. Meanwhile, supply constraints
was reported in March 2020 and the coun-
sq m. However, given the turnaround
in 2018-2019 pushed the capital’s vacancy
try soon went into its first lockdown,
times of office projects, a substantial
rate down to 7.8% in Q4 2019, its lowest
which had a significant ripple effect on
proportion of developments underway
since 2012.
the growth of its office market.
were commenced in the pre-pandemic
Regional city office markets repor
The COVID-19 pandemic impacted
ted strong growth in the last decade, with
the supply side of the office market in
environment. Cushman & Wakefield forecasts that
some markets more than doubling or even
two time frames. In the short term, no
new office completions in 2023 will pro
quadrupling in size. Interestingly, the total
legislation that could have delayed con
vide approximately 180,000 sq m, which
office stock in Krakow and Wrocław sur
struction works was introduced during
will represent a significant fall in sup
passed the one million square metre mark
the first national lockdown. However,
ply. The weaker supply will result from
in under ten years and amounted to 1.4
completion of some projects was pushed
adjusting the number of new projects to
and 1.2 million sq m at the end of 2019,
back from the second to the third quar
the current demand level and the growth
respectively. The rapid growth in supply
ter of 2020 due to protracted administra
in construction, energy and labour costs,
in the regional city office markets was
tive procedures, limited labour availa
which accelerated further following Rus
fuelled by more and more office space
bility and potential disruptions to supply
sia’s invasion of Ukraine in February
requirements coming from the business
chains. Having said that, most projects
2022. According to estimates from Cush
services sector, which is the main driver
scheduled for delivery in the second half
man & Wakefield, the tight development
of demand in regional cities.
of 2020 and in 2021 were completed on
pipeline is likely to persist until 2025.
Focus on Business | May–June 2022
