2019: Office market trends in Poland

13 January 2020

In 2019, we could observe further intense development of the office market in Poland. The most dynamic development of the office real estate segment is visible in Warsaw, which has outperformed regional markets in terms of demand. Walter Herz analysts predict that this year will close with the best-ever result in terms of the amount of space leased on the capital market. This year, we have already seen record lease transactions in Warsaw. mBank has leased 45.6 thousand sq m of office space in Mennica Legacy Tower, whereas Orange Polska renewed its lease of nearly 45 thousand sq m. of offices in Miasteczko Orange.

Clear changes in all of the largest office centers in Poland can also be seen in the demand structure, where the share of pre-let contracts is increasing. In regional cities, pre-let already covers a third of the leased space. In Warsaw, most offices under construction are already secured by contracts.

Bartłomiej Zagrodnik, Managing Partner at Walter Herz notes that today we are dealing with very high tenant activity on the office market, from both private and public sectors. - Constant demand for offices, not only in large cities, but also in smaller urban centers, in turn, encourages developers to act, rapidly launching other, often spectacular projects. In addition, they are also motivated to initiate new investments by large interest in commercial real estate from various capital markets, including those that so far have been less active in Poland – informs Bartłomiej Zagrodnik.

Walter Herz’s Managing Partner emphasizes that the economic growth seen in the country, an ever wider range of investment products, including primarily AAA class facilities and high demand from tenants foster investments in Poland, as evidenced by the minimum vacancy rate in the office segment. - Not only the Warsaw market is enjoying the investors' interest, but also regional markets, with this year’s record-high level of investment transactions in the office sector. Cracow, Wrocław and the Tri-City achieve the best results in this respect. This proves good shape of the office segment in Poland - says Bartłomiej Zagrodnik.

Poland is perceived as a stable and mature economy, hence large international funds are increasingly willing to invest with us. Participation in investment transactions increases primarily due to the Asian capital, especially from South Korea. Walter Herz data shows that the value of investment transactions on regional office markets outside Warsaw has already exceeded EUR 1 billion this year, which is the best result in history. In all of Poland, the total sum of transactions involving office buildings after three quarters of this year, exceeds the amount of the entire last year's volume.

 

According to Walter Herz, 1.7 million sq m. of office space is currently under construction on the office market in Poland. Among the implemented investments there are also those that impress with their enormity. The largest complex under construction is Warsaw's Varso, which will offer 110 thousand sq m. of office space. Commissioning of several spectacular office towers in Warsaw, including Mennica Legacy Tower, Widok Towers, The Warsaw HUB and Skyliner is scheduled in the upcoming weeks.

Large facilities that are to offer offices at the highest world level are under construction in the largest business centers in the country. Mixed-use projects, which are often based on the revitalization of historical industrial buildings, are appearing more and more often among them. Mixed-use facilities, such as Warsaw investments Elektrownia Powiśle, The Warsaw HUB, Fabryka Norbina, Browary Warszawskie and Koneser, as well as Łódź-based Fuzja and Monopolis are very popular among tenants. Therefore, according to Bartłomiej Zagrodnik, the upcoming weeks will be a period of intense development of mixed-use investments, which today very often bring about the reconstruction of large fragments of cities, and some of them are under conservation protection.

The coming months will also bring verification of the instant office and co-working space market, which has recently significantly increased its resources in Poland, primarily in Warsaw. Opening several new locations of flexible spaces, including in the Warsaw Hub, Central Point, Varso, Mennica Legcy Tower, Fabryka Norblin and Monopolis complexes, will reveal the real demand for this type of space, which will determine the pace of development of this segment in our country.

Developers have recently put more emphasis on increasingly advanced technological and ecological solutions. Lately, we have been able to observe a number of changes in this area on the office market. Arrangement of new facilities goes towards increasing energy efficiency and reducing the negative impact of buildings on the environment.

Office buildings are becoming, not only more and more comfortable, but also economical. The solutions used in them allow to obtain a good result under multi-criteria certification, in the process of assessing energy efficiency, water management efficiency, the quality of the building's internal environment, waste reduction and the use of recycling, as well as the quality of materials used for building facilities. Currently available technologies allow creating zero-energy buildings, that is facilities with zero energy consumption and zero carbon dioxide emission. The most modern complexes are striving to confirm their standard with WELL certificate.

The most prestigious buildings are testing systems supporting users in organizing their everyday work. It is possible thanks to smartphone applications that allow customizing light, temperature, humidity in the rooms, booking a conference room, parking space or other services.

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