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Summary of regional city office markets after Q1 2019. Regional office stock expected to equal the size of the Warsaw office market soon

Krzysztof Misiak

International Partner

Phone +48 601334629

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Global real estate services firm Cushman & Wakefield has summarized Poland’s regional city office markets in its latest report “MARKETBEAT – REGIONAL CITY OFFICE MARKETS IN Q1 2019”.

  • In Q1 2019, the office sector turned over EUR 526m across 12 transactions;
  • Prime office yields stand in Krakow and Wrocław at 5.75% and 6.00%, respectively;
  • New office leases accounted for 54% of all deals on Poland’s regional city office markets. Renegotiations and expansions made up 38% and 6%, respectively, with the remaining 2% being owner-occupier deals;
  • The strongest leasing activity was in Krakow, Wrocław and Łódź;
  • In Q1 2019, absorption amounted to 44,100 sq m on the regional city office markets;
  • The office stock of the Upper Silesian and Zagłębie Metropolis, comprising cities with a population of over 100,000, was included in the analysis of the Katowice office market in Q1 2019.

In Q1 2019, leasing activity hit a total of 130,500 sq m, which represented a mere 2% increase on the level seen in the same period last year. The total office stock of Poland’s core regional cities (Krakow, Wrocław, Poznań, the Upper Silesian and Zagłębie Metropolis, Łódź, Lublin and Tricity) reached 5.19 million sq m. With a combined office stock of more than 3 million sq m, Krakow, Wrocław and Tricity are the biggest regional office markets.

The rapid growth of regional markets is a major indicator of Poland’s strong macroeconomic fundamentals. The inclusion of the Upper Silesian and Zagłębie Metropolis cities in the analysis of regional city office markets is another confirmation of robust occupier interest in other locations than Krakow, Wrocław, Tricity, Katowice, Poznań, Łódź, Lublin or Szczecin. In 2019, office demand on regional office markets will be driven, among other things, by BSS tenants growing in their current locations and expanding into other cities,” said report author Jan Szulborski, Consultant, Research and Consulting, Cushman & Wakefield.

The largest leases recorded in Q1 2019 included Akamai’s 11,200 sq m renegotiation in Krakow, Perform Media’s 6,400 sq m pre-let in Katowice, and GlobalLogic’s 6,300 sq m renegotiation and expansion in Krakow.

The overall vacancy rate on Poland’s regional city office markets rose by approximately 1.05 pp compared to Q4 2018. The lowest vacancy rate is in Tricity while the highest is in Poznań. Office rental rates remained flat at EUR 12-15/sq m/month.