Regions are catching up with Warsaw

The pace of growth of the Polish office market allowed for some record results this year

Analysts at Walter Herz consulting company are estimating that this year's office space in Poland has a chance to increase by 800 thousand sq m, with over 500 thousand sq m of offices commissioned in the regional cities. – Everything indicates that this year, facilities in smaller cities will see a record supply – note Walter Herz experts. According to experts predictions, the combined resources of regional markets may reach similar volumes of the Warsaw office market in the near future.

Demand exceeds supply

In the middle of this year, Warsaw offered over 5.16 million sq m of modern office space. The first 6 months brought over 130 thousand new offices in the capital. Three times as much office space has been leased. In the first half of the year, over 390 thousand sq m of offices in the Warsaw agglomeration found tenants. High demand for new offices is stable throughout the country, therefore in Warsaw and in the major regional cities, the vacancy rate is declining, despite the rapid increase of resources.

In the first half of the year, there were a few large transactions that involved leasing several thousand sq m of space on the Warsaw market. Millenium Bank renewed an agreement for over 18 thousand sq m of space in Harmony Office Center, whereas Alior Bank in the Łopuszańska Business Park and AstraZeneca pharmaceutical company in Postępu 14 building have contracted over 13 thousand sq m. Also, a pre-let agreement for a similar size space has been signed by Citi Service Center Poland service network in Generation Park X.

Regional markets increase their potential

In turn, eight largest cities in Poland, apart from Warsaw, offer a total area of 4 million sq m of offices, which is about 80 per cent of resources of the metropolitan agglomeration. According to Walter Herz experts, it is worth noting that in the past 10 years, the regions have made up almost half of their losses to Warsaw. A decade ago, regional cities such as Cracow, Wrocław, the Tricity, Katowice, Poznań, Łódź, Szczecin and Lublin, had offered a total volume of about 40 per cent of all Warsaw resources.

The new supply that can be reached by the regional markets is not the only record that Polish office market has a chance of celebrating this year. Moreover, office segment saw a record high score in terms of leased space. According to Walter Herz analysts, the contracts signed only in the first three months of 2017 concerned space that constituted about 30 per cent of all of last year's lease volume.

Few vacant offices

In regional cities, the demand for office space is growing year by year. Unlike the Warsaw market, where vacancy levels dropped to less than 14 per cent, they are characterized by very poor availability of office space, and pre-let contracts represent the majority of transactions. Meanwhile, in Warsaw in the first half of the year, agreements of this type covered only a dozen per cent of the lease volume.

The lack of vacant space is particularly noticeable in Łódź, Cracow and the Tri-City. Despite the increasing supply, the vacancy rate in Łódź office market is currently at the lowest level in Poland - about 6 per cent. Recently, Łódź has definitely been emerging among the regional centers. Large commercial projects are being prepared and implemented throughout the city, including office hub near the new railway station.

Global players on the Polish market

Also Cracow office market, which is the second largest one in terms of volume in Poland (after Warsaw) is developing very fast. Companies from the modern business services sector are the most influential, opening up many centers which are working for their global clients in Poland.

What is more, new offices are not waiting for tenants in Wrocław, Katowice and Poznań. In these cities, expansion of the existing companies, but also new ones, including the largest international players is also visible. On the other hand, the largest developers, who so far have been implementing projects exclusively on the Warsaw market are becoming more active in the regional cities.

Poland is the leader in Europe

Boom, experienced by the Polish office market, is characterized by much greater dynamics of development of the new investments, than in other countries in Europe. Despite the steady decline in the resources of attractive investment areas, Warsaw still offers far greater opportunities in this respect, than other European capital cities. New investments in the city are popping up like mushrooms.

According to Walter Herz experts, over 800 thousand sq m of offices are under construction in the Warsaw agglomeration. In the remaining cities, another 900 thousand sq m of space is also emerging. Each year, Polish office market increases its potential by about 10 per cent. Walter Herz specialists point out that this is another record-breaking achievement of the sector, this time on a European scale.

Author: Walter Herz

About WALTER HERZ

Walter Herz is a leading Polish company operating in the real estate development sector, providing comprehensive, specialized consulting services. The company offers comprehensive services to the entities associated with real estate market, advising commercial tenants, property owners and investors. It assists companies in finding and leasing space as well as commercializing investments.

The company provides investment consulting services, develops financial analysis, and assists clients in managing and administrating projects, based on comparative analysis and market research.

Walter Herz consultants are looking for opportunities to take advantage of the full potential of the market to achieve results that exceed customer expectations. The company structure includes specialized departments that team up project managers, who perform dedicated tasks, which allows for maximizing the value of customer transactions. The agency also provides architectural support.

The company cooperates with private and institutional investors, real estate developers and investment funds, providing clients with full access to information, contacts and market analysis.

The agency is affiliated to organizations and associations supporting the development of the BPO/SSC sector in Poland. Striving for the highest level of professionalism in cooperation with customers and business partners, as well as the highest ethical level of services provided, the company introduced the Code of Good Practice.

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Regions are catching up with Warsaw

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