At the end of June 2022, the total stock of A-class office space in Poland amounted to over 12.6 million sq m. Developer activity in the second quarter of this year amounted to 103,900 sq m, which was reflected in the completion of 12 office buildings. Counting the projects commissioned from January to June 2022 for the office market in Poland, a total of 34 investments were delivered, the total area of which amounted to 440,800 sq m. The largest office buildings completed in the analyzed period included Forest Tower (51,500 sq m, HB Reavis, Warsaw), KTW II (39,900 sq m, TDJ Estate, Katowice) and Midpoint71 (36,200 sq m, Echo Investment, Wrocław) .
In the case of Warsaw, in the second quarter of this year. Two projects were commissioned, ie SkySAWA (22,800 sq m) and Intraco Prime (12,800 sq m), which increased the total resources of the Warsaw office market to less than 6,270,300 sq m. The total result of new supply in the capital in the first half In 2022, it is over 129,000 sq m. The real construction site, however, is the regional office markets. There, in the first half of 2022, as many as 26 investments with a total area of 311,800 sq m were delivered. From April to June this year. 10 more projects were delivered, the largest of which was the first phase of The Park Kraków project (11,700 sq m, White Star) in Kraków. In the context of new supply in regional cities, most projects were completed in Kraków (approx. 26,300 sq m), Tricity (18,800 sq m) and Łódź (18,800 sq m). High developer activity translated into an increase in the total office stock in eight major office markets (Kraków, Wrocław, Tricity, Poznań, Katowice, Łódź, Szczecin and Lublin) to 6,335,700 sq m. The largest business centers, after Warsaw, are Kraków (1,666,200 sq m), Wrocław (1,284,500 sq m) and Tricity (1,010,900 sq m).
New supply in the office market in the second quarter of 2022 slightly affected the vacancy rate. There is approximately 1.71 million sq m on the Polish market. space available immediately. In Warsaw, at the end of June 2022, the vacancy rate was 11.9% (747,700 sq m), with a very clear deficit of free space in central zones. On the other hand, 961,000 sq m remains available for lease in the regional office markets. (15.2%). The highest registered vacancy rate remains in Łódź (18.6%), and the lowest in Szczecin (4.9%).
After the first half of 2022, the total volume of lease transactions in the Polish office market ended with 829,500 sq m. In the first three months of 2022, tenants signed contracts for a total of 427,700 sq m. (WAW 267,200 sq m; regions 160,500 sq m), in turn in the period from April to June this year An additional 401,800 sq m was leased. (WAW 212,200 sq m; regions 189,600 sq m). In the second quarter of 2022, the highest demand in regional cities was recorded in Kraków (73,900 sq m), Wrocław (25,600 sq m) and the Tri-City (25,100 sq m). In the lease structure in the capital from April to June this year. tenants most often decided to renegotiate (48%), which were ahead of new contracts (45% including pre-let) and expansions (7%).
“We are seeing high demand in Warsaw, which has resulted in the declining vacancy rate in central zones. At the current stage, tenants are not afraid of covid. In the case of the next wave, procedures related to greater sanitary safety will be included again, such as the introduction of a shift work system or a home office to a greater extent. Another consequence of the tenants being calmed down in the context of the pandemic is the lower number of decisions regarding the optimization of space. The industries that, from our perspective, increase their demand for modern office space include law firms, tax companies, the IT industry, as well as operators of serviced offices. The growing number of companies relocating their activities from the east, mainly from Ukraine, is of particular importance for the growth of the last group. These tenants are most often looking for a smaller space for 4-5 people for about a year. Two factors will have an impact on whether companies from the East will become a significant group of tenants, which will decide to rent traditional office space in the coming quarters. The first is the degree and time of adaptation to the conditions and the labor market in Poland, and the second is the further fate of military operations in Ukraine, " says Jakub Potocki, Senior Consultant in the Office Agency Department, AXI IMMO.
Among the largest transactions closed on the Warsaw office market by the end of June this year. there were two pre-lease contracts. In the first stage, PKO BP has leased 34,500 sq m. in the SKYSAWA complex, in the second one, a confidential tenant from the banking sector will occupy 30,000 sq m. in the Forest Tower building. The podium is closed with a transaction from the second quarter of 2022, in which Samsung Electronic Polska (R&D) renewed the lease agreement for nearly 21,000 sq m. in the Warsaw Spire C building. In turn, the most interesting transactions in the regions took place between April and June 2022. Capgemini signed a pre-let agreement for 13,800 sq m. in the Fabryczna Office Park B5 building, and Cisco Systems Poland decided to renegotiate and renew the 12,500 sq m lease. in Enterprise Park C. The regional podium for the first six months is complemented by a new contract signed in the KTW II building,
“Among the key trends for the coming months, it is worth pointing out that the growing demand and limited supply will certainly be reflected in rising rental rates. As of today, it is difficult to estimate to what extent property owners will increase the starting rents in the case of new tenants. At the present stage, it is also more difficult to negotiate incentives in the form of longer rental holidays or greater participation in fit-out costs. Space arrangement valuations are slowly stabilizing, which is due to greater price normalization and greater availability of materials. Initial fit-out rates for Shell & Core space in the central zones of Warsaw remain at the level of EUR 900-1000 / sq m, with the average time for key-to-key projects from signing the contract lasts approx. 5 to 6 months, " forecasts Bartosz Oleksak, Senior Consultant in the Office Agency Department, AXI IMMO.
“In the context of medium and long-term trends, it is certainly also worth mentioning the rising costs of service charges. We expect that the so-called The service charge for less energy-efficient office buildings may start at PLN 30 / sq m at the beginning of 2023, ” adds Jakub Potocki.