According to DTZ’s new Property Times Office Poland report, modern office stock in Warsaw and eight major regional cities (Krakow, Wroclaw, Tri-city, Katowice, Poznan, Lodz, Szczecin and Lublin) amounted to a total of 7.55 M sq m at the end on 2014. That year was certainly one for the books, both in terms of take-up and transacted volume totals.
Developer activity on the Polish real estate market is very strong, which results in high levels of new take-up. In 2014, permissions for use were issued for a total of 622,000 sq m of space, the highest in Poland to date. 277,000 sq m of office space was delivered outside of Warsaw; 110,900 sq m in Krakow; 68,500 sq m in Tri-city; 62,300 in Katowice and 61,600 sq m in Wroclaw. Taking into account the amount of pipeline supply and developer plans we expect these figures to increase in 2015 and 2016, said Katarzyna Lipka, Associate Director in Consulting & Research, DTZ.
Total rental take-up on the Polish market exceeded 1 M sq m in 2014. 610,000 sq m of space was rented in Warsaw, representing a slight drop compared to the same figure for 2013. However, in other cities gross take-up for 2014 was more than 400,000 sq m, 12% higher than in 2013. Among Poland’s regional cities, the most space was rented in Krakow (115,000 sq m) and Wroclaw (95,000 sq m).
Vacancies at the end of 2013 decreased on the whole, the only increases being noted in Warsaw (by 1.6 pp, to 13.3%) and in Krakow (by 3.9 pp to 11.1%). The latter city has the lowest vacancy indicator (5.2%), which indicates that demand for office space in Krakow remains stable and high.
Asking rents for prime office space dropped slightly in the centre of Warsaw (to EUR 22-25 per sq m per month), but remained stable outside of the centre and in regional cities, hovering around EUR 11-15 per sq m per month. Over the next two years, we expect further reductions in effective rents due to competition between landlords.