July 01, 2015

Poland remains the largest office market in Central and Eastern Europe

Poland remains the largest office market in Central and Eastern Europe

The “Business Services Sector in Poland 2015” report was presented at the 6th ABSL conference. It was prepared by ABSL in cooperation with Antal International, Baker & McKenzie, Everest Group and JLL. According to the report, business services centres with foreign capital employ more than 150,000 professionals.

If it were not for the business services sector, office markets outside Warsaw would currently be at a different level of development. Poland has a leading position in CEE in terms of modern office stock, with more than 7.5 million sqm on offer at the beginning of 2015, which is, to certain degree, due to this strategic sector.

Currently, there is about 1.4 million sqm of office space under construction, of which 50 percent is located in Warsaw (755,000 sqm, including refurbishments and extensions of existing buildings). In terms of regional cities, the most dynamic markets are Wrocław, Kraków and the Tri-City, where 178,000 sqm, 157,000 sqm and 140,000 sqm of office space, respectively, are in various stages of development. This construction activity translates into increased office space availability, creating favourable market conditions for tenants.

Anna Młyniec, Head of Office Agency and Tenant Representation at JLL, said: “What makes Poland so unique among all the CEE countries is the large number of urban hubs, such as Warsaw, Kraków, Wrocław, Tri-City, Katowice, Poznań, Łódź, Szczecin and Lublin. Smaller cities offering well-developed infrastructure and a trained workforce are also on the business services sector's radar. A diversified range of properties on offer is certainly Poland’s significant asset.“

2014 was a record breaking year for the Polish office market with total demand hitting the 1 million sqm mark. The total demand in Q1 2015 was also promising - 300,000 sqm, of which 132,000 sqm was outside Warsaw.

“In the last few years, demand in the main Polish agglomerations has been growing steadily. This increase is due to the influx of new business services companies and to those already operating in Poland. The volume of occupied office space has also been growing along with new investments and an increase in employment rate,” explained Mateusz Polkowski, Associate Director, Research and Consulting at JLL.

In Q1 2015 in Kraków, the largest office market outside Warsaw, the vacancy rate stood at 6.2 percent. The situation was different in Poznań, where the vacancy rate is the highest in Poland (around 23 percent). On other largest regional markets, the vacancy rates range between 7.9 percent (in Łódź) to 14.1 percent (in Szczecin).

"It is worth noting that companies looking for office space to rent and considering a certain city, should take into account not only the vacancy rate, but more importantly the number of options available to lease office space in existing buildings and those under construction. From the perspective of a single company searching for a particularly large office, the vacancy rate often does not reflect the situation on the market,” commented Anna Młyniec.

“Potential tenants looking for office space in Poland have a wide range of choice in terms of both technical standards and rents. Rental prices for the best office spaces in Poland, meeting the requirements of the modern business services sector and located in the largest cities, including non-central major office hubs in Warsaw, are between €11 and €15 / sqm /month. Rents are lower on 'up and coming' markets, such as Rzeszów, Olsztyn, Opole, Bydgoszcz, Toruń or Kielce - €8 – €12 per sqm a month,” Anna Młyniec concluded.

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