Cracow with the highest growth on the regional office market

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In 2021, so far, the regional office market has grown by an additional 146,000m², most of which was delivered in Cracow – 47,000m², an increase of 3.2% year on year. At the same time, Poznan was marked by faster growth pace – at 6%, year on year, secured by one large office building. The advantage of new agreements, pre-leases and expansion over renegotiations signal that positive moods prevail among office tenants in the regions.

The pandemic’s consequences are still observed in the office market, but optimism among occupiers, on the other hand, is a positive indicator. The markets are dominated by new leases, pre-lease agreements, and expansions. Renegotiations are significantly less common now than they were at the start of the pandemic. Tenants are increasingly contemplating relocation to new cities. The amount of enquiries concerning new Poland entries is also on the rise. The fact that tenants are seeking for new places to work will undoubtedly boost the market. Companies’ policies on employee return to workplaces, mostly in a hybrid manner, are also slowly taking shape, according to CBRE.

• The most office space was delivered in Cracow – 47,000m², an increase of 3.2% year on year, to a total of 1.6 million m² of office space, reaffirming the city’s position as the largest regional office market.
• The second-largest market is Wroclaw with 1.24m² of office space – here the increase this year was 11,800m² (+1%), thanks to the completion of the building Krakowska 35.
• Tricity came third, with more than 923,000m² of office space. This year, a total of three new buildings with a total area of almost 35,000m² have been delivered, securing the market growth of 4% year on year.

For the same period, the increase in Katowice was by 2% year on year; in Lodz – 1% year on year. Poznan stands out especially, with a 6% year on year, secured by 36,000m².

New contracts dominate amidst stable vacancy

The demand for offices in the regions now amounts to 377,300m², which is a decrease of 27% than before the pandemic and a decrease of 18% compared to the corresponding period of 2020. In the structure of contracts, new contracts dominate clearly – 52%, followed by renegotiations – 40% and expansions – 8%.

At the end of Q3, the vacancy rate, estimated for eight major regional markets was at the level of 13.5% – an increase of 1.6 pp. year on year. This gives a total of 805,700m² of office space available for rent immediately. Lodz came with the highest vacancy rate, while the lowest was recorded in Szczecin. The fall of subleases provided in the markets is one key reason driving the slowdown in vacancy increase.