Despite the anticipated large wave of new office supply, the Łódź market is well-balanced. Rents hold firm and tenants continue to target office buildings in the city centre.
According to “Occupier Economics: Łódź Office Market, H1 2018”, the latest report prepared by Cresa Poland, the city’s total office stock rose 11 percent year-on-year to 439,300 sqm. Only one office building was delivered to the market in the first six months of 2018: TME (5,500 sqm, Transfer Multisort Elektronik) while the leasing volume amounted to 27,800 sqm, of which more than 70 percent was transacted under new leases.
Three biggest lease transactions on the Łódź office market in H1 2018 included GFT Poland’s 4,100 renegotiation at Sterlinga Business Center, Clariant’s 3,700 sqm lease at Monopolis M1 and ING Bank Śląski’s 2,200 sqm renegotiation at Hammermed.
“There is strong occupier interest in co-working office space, particularly among firms entering the Łódź market or micro-divisions of Warsaw-based companies. By contrast, larger and well-established tenants target Class A office buildings which facilitate top talent recruitment,” said Marta Pyziak, Head of the Łódź Office, Cresa Poland.
At the end of Q2 2018, the city’s vacancy rate stood at 8.6 percent, down by 1 p.p. compared to where it was in March 2018, but up by 2.6 p.p. on H1 2017’s level. Asking rents were €9-14/sqm/month in the city centre and €8-12/sqm/month in non-central locations.
“Absorption in H1 2018 hit 8,100 sqm, which represented a fall of more than 70 percent compared with the same period last year. It is a temporary decrease due to a smaller number of office buildings coming onto the market. Absorption is, however, expected to soar starting from the second half of the year as a result of the new wave of supply and the volume of leases signed by landlords of office schemes under construction,” said Bolesław Kołodziejczyk, PhD, Head of Research & Advisory, Cresa Poland.