The Valuation Department at JLL has summarized 2015 on the commercial real estate market in Poland. 2015 was characterized by extraordinarily high activity among real estate investors. In terms of investment volume, 2015 proved to be a record-breaking year with €4.1 billion of transactions concluded. This is the second best result in the history of the Polish market. Investors were the most active in the retail segment where projects worth in total €2.26 billion changed hands. Office projects attracted ca. €1.27 billion followed by the industrial segment with €473 million.
A drop in yields was registered (practically in all sectors) due to the high interest shown in the Polish real estate market by investors. This also resulted in an increase in the value of real estate in Poland.
Marek Jamro, National Director, Valuations Department at JLL Poland, commented: “This trend is likely to continue in the near future. Nevertheless, from a long-term perspective, the drop in yields alone may prove to be insufficient to sustain the growth of real estate value as an increase in rent levels would be necessary as well. However, this is highly unlikely due to the intense competition for tenants.”
2015 witnessed the highest tenant activity in the history of Poland’s office market. Lease agreements for approx. 1.5 million sqm were signed with Warsaw accounting for 834,000 sq m of this total. Prime headline rents in Warsaw edged down over the course of 2015, with City Centre rents declining from €22–24 / sqm / month to €21–23.5 / sqm / month and Non-Central locations commanding rents of €11–18 / sqm / month. Downward pressures are applicable to effective rents, which are on average 15–20 percent below headline rents. Rental levels across core regional office markets levelled off in 2015. Currently, prime headline rents range between €11 to €12 / sqm / month in Lublin and €14 to €14.5 / sqm / month in Poznań, Wrocław and Kraków. Looking ahead, slight reductions in prime headline rents can be expected in 2016.
Furthermore, 2015 was also a good year for the retail market in Poland. During the last 12 months, up to 502,000 sqm of new shopping centre stock was delivered to the market. It is considerably more than 2014 when 332,000 sqm entered the market. Prime shopping centre rents increased slightly in Warsaw Agglomeration (to €110-130 / sqm / month), Poznań (up to €45-50), Kraków (up to €50-55) and Tri-City (€47-50), and remained stable on other markets.
2015 saw record breaking take-up as well on Poland’s industrial market with lease agreements for 2.22 million sqm concluded during the year. Average headline rents in industrial parks located out-of-town are at between €2.6 and 4.5 / sqm / month.
“In 2015, JLL valued over 700 commercial real estate projects worth in excess of €21 billion. Especially high activity was recognized in both the retail and industrial sectors and this resulted in a large number of valuations for transactional purposes,” said Jakub Kleban, National Director, Valuations Department at JLL Poland.
“Furthermore, we advised on numerous newly-developed projects from the office, hotel and residential segments in both Warsaw and Poland’s regional cities. Apart from valuations related to sale and purchases of real estate, we also recognized an increase in demand for valuations for real estate financing purposes,” added Małgorzata Żółtowska, Chief Operating Officer, Head of Valuations CEE at JLL.
