The Shifting Landscape of Polish Commercial Real Estate
Poland's real estate sector is entering a phase of "real estate recycling," but this isn't the green, adaptive reuse many might envision. Instead, demolitions far outweigh genuine building conversions, and the new projects emerging often fail to deliver much-needed office space. The discussion around a "wave of conversions" is prevalent, yet the number of projects truly embracing a "reuse & refurbish" model remains marginal.
The reality on the ground shows that most conversions involve tearing down existing structures and erecting new ones, rather than modernizing and adapting current buildings. Bartłomiej Zagrodnik, Managing Partner, CEO at Walter Herz, notes, "There’s a lot of talk about conversions, but few real examples of such ventures on the market. Older office buildings are mostly demolished, not modernized. In their place, primarily residential investments are emerging, leading to a systematic shrinking of office resources in major cities, especially in Warsaw."
Demolitions Dominate, True Conversions Are Rare
Projects based on the modernization of existing office buildings are sporadic. Warsaw, for instance, offers only a handful of examples where office spaces are genuinely repurposed without demolition. Notable instances include the office building at Moniuszki 1A, set to become an apartment building, and Siennicka 29, which has already transitioned from office to residential. The Nowy Świat 2.0 building is also returning to its original residential function after a stint as an office.
More often, entire office complexes are being cleared for residential use. The former 1990s CPD office building on Cybernetyki Street is now the site of the Esy Floresy residential estate. While some office buildings, like Lipowy Office Park Building A, have been adapted for new institutional uses (Police Headquarters), and Building B transformed into co-living dorms, these are exceptions rather than the rule.
Far more common are outright demolitions. While iconic structures like Intraco and Ilmet are making way for new office towers, many other significant office parks are disappearing to become residential zones. The Empark Mokotów Business Park complex, including Saturn, Sirius, and Orion, is being replaced by the Moderna Mokotów housing estate. Similarly, Libro Mokotów, Cybernetyki Office Center, Trinity One, and five buildings at Marynarska/Wynalazek are all slated for residential development, dramatically reducing Warsaw's office stock.
Economic Realities Drive Developers Towards Residential Projects
The decision to demolish rather than modernize is primarily an economic one. Bartłomiej Zagrodnik explains, "The cost of modernizing older office buildings is often higher than constructing new ones, and their design frequently prevents the implementation of modern architectural and technical solutions."
Moreover, current rental rates for offices in Poland make new projects less attractive. Record-high construction costs, stringent ESG requirements, formal and administrative hurdles, and limited access to bank financing further complicate office development. Developers are shifting to residential construction because "revenues from office rentals in Poland are significantly lower than in Western European markets, whereas returns from residential rentals remain at a more comparable level."
Prime office rents in Warsaw hover around 22–26 EUR/sqm, starkly contrasting with Berlin (40–50 EUR/sqm) or London's West End (110–130 EUR/sqm). Meanwhile, residential rents in Warsaw (75–90 PLN/sqm) are much closer to those in Berlin (18–22 EUR/sqm) or Barcelona. This disparity means that "until office rents in Poland approach Western European levels, office conversions will only occur for properties with exceptionally good initial parameters."
A Growing Deficit in Modern Office Space
Developers have largely halted new office investments across almost all markets, leading to an extremely limited new supply, especially in Warsaw. Singular projects, such as the office building in the second phase of the Towarowa 22 mixed-use development, are insufficient to bridge the widening supply gap.
Across Poland, only just over 400,000 sqm of new office space is currently under construction. This pales in comparison to the development boom period when Warsaw and regional cities each saw up to 800,000 sqm under construction. Warsaw alone expects merely 60,000 sqm of new space to be delivered in 2026, signaling a significant shortage on the horizon.
Demand Remains Strong, Creating New Opportunities
Despite the constrained supply, demand for office space in Poland remains stable and high, with Warsaw and Krakow generating the greatest need. Walter Herz estimates that approximately 1.5 million sqm of space will be leased in major cities in 2025, mirroring last year's figures.
In response to the growing deficit of modern office space, areas like Warsaw's Służewiec Przemysłowy – often dubbed "Mordor" – are re-entering the spotlight. This district, despite having a 17–18% vacancy rate, is seeing a resurgence in rentals. Companies are increasingly opting for modernized office buildings in Mokotów rather than enduring a 2–3 year wait for new projects in central locations. They are also willing to pay higher rents for high-quality, well-connected workspaces.
Should the current supply-demand dynamics persist, the Warsaw market could face a significant increase in rental rates, particularly within the central business district. This presents both a challenge and an opportunity for businesses seeking strategic locations.
Finding Your Next Office in a Dynamic Market
The Polish office market is undergoing a profound transformation, moving away from new builds and towards re-evaluating existing stock – often by converting it to residential. While this tightens the supply of modern office space, it also means that existing, well-maintained, and strategically located offices, particularly in areas like Mokotów/Służewiec, are becoming increasingly valuable. Businesses need to act decisively and consider a wider range of options to secure prime office locations in this evolving landscape.
Source: prestigepr.pl
