About 1.74 million sq m of office space is currently under construction on the main markets in Poland. According to Walter Herz data, around 760 thousand sq m of offices are under construction in Warsaw alone, whereas in the remaining business centers in the country, around 980 thousand sq m of modern office space is in progress.
Almost 70 per cent of the new offices built in the regions are in investments carried out in Wroclaw, Cracow and Tri-City. And it is these agglomerations that will soon report the largest increase in supply. Nevertheless, in all of the largest office centers in Poland, high activity of real estate development companies is visible. Huge demand for modern office space reported by the companies already present on the market, and those who are just entering the Polish market, motivates the investors to increase their business activity.
Three cities with over one million sq m of offices
Walter Herz specialists calculate that today, the resources of the Polish office market exceed 10.2 million sq m of space, 5.42 million sq m of which are offered in Warsaw. In the leading regional markets, the supply of office space amounts to a total of over 4.8 million sq m, with Cracow, where there are now over 280 thousand sq m of offices under construction and Wroclaw, where around 240 thousand sq m of space is being developed. Both cities provide office supply exceeding 1 million sq m.
Tri-City, where almost 160 thousand sq m of modern office space is under construction, is getting closer to achieving this level, although it will probably exceed it in 2021. In contrast, Poznan, Katowice and Łódź, which compete with each other, will soon have 500 thousand sq m of offices.
Despite the large number of new offices delivered on the main regional markets during the first nine months of the year - a total of approximately 440 thousand sq m of space - the vacancy rate in the regions remains at an average level of 9.7 per cent. According to Walter Herz data, the smallest percentage of vacant offices is seen in Poznan and Tri-City. Only about 6.4 - 6.7 per cent of space remains vacant in these locations.
Warsaw with the smallest number of vacancies in the last 5 years
Due to the high absorption recorded on the capital market, vacancy rate in Warsaw has dropped to the value which hasn’t been seen in the last five years, that is to the level below 10 per cent. The least amount of vacant space is in office buildings located in the central part of Warsaw, where only 6.5 per cent of offices is awaiting tenants.
Warsaw is the most absorptive office market in Poland and also ranks among the European leaders in this respect. According to Walter Herz data, in the first three quarters of 2018 almost 630 thousand sq m of office space was contracted in the agglomeration.
The inflow of new international companies and the expansion of tenants already present on this market, as well as growing interest in leasing commercial space from state institutions motivates investors to take action. The office map of Warsaw is gaining new offices, some of which are spectacular projects that have not been seen in Poland yet. In addition to large, spectacular facilities, affordable projects are entering the market as well, such as Neopark complex located in the business part of Warsaw’s district of Mokotow, the construction of which has just ended, or the investment carried out by Yareal company related to Lixa project in Wola.
The highest office tower in the European Union to be built in Poland
In Warsaw, the area around Daszyńskiego roundabout and along Prosta and Świętokrzyska streets are developing extensively. A modern business district is emerging in this location. Soon, such offices as The Warsaw Hub (75 thousand sq m), Skyliner (44 thousand sq m), Generation Park Z (20 thousand sq m) and Spark B (16 thousand sq m) and Mennica Legacy Tower (60 thousand sq m) will be included in the office landscape of Warsaw. PHN Tower complex is being prepared for construction at Świętokrzyska Street. It will provide about 40 thousand sq m of leasable space. Around the same area, Central Point with 18 thousand sq m is under construction.
Moreover, Widok Towers will emerge in the place of Universal office building by Dmowskiego roundabout, next to the new Rotunda,. Almost 95 meter high tower will bring 35 thousand sq m of space. The biggest investment carried out in Warsaw, however, is Varso project implemented on the corner of Chmielna and Aleja Jana Pawła II streets leading up to Żelazna street. The complex will offer 140 thousand sq m of lease space.
According to Walter Herz analysts, the total supply of new office space in Warsaw this year will close at around 250 thousand sq m. In 2019, Warsaw market will get a similar amount of space. Whereas, 2020 will bring a substantial amount of new office space to the city, when large, ongoing projects are completed.