Coronavirus Market News

Office sector on the offensive despite the pandemic

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Most Poles would like to work remotely 1-2 days a week, according to the CBRE “Work from home survey”. 3 out of 4 people asked declare that they would like to work remotely. We prefer to spend the rest of our working days in the office. Therefore, even though many people still work from home or shifts due to the epidemic, the offices are not yet finished. Currently, 96 office buildings are being built in our country, 89 of which will be completed by the end of 2022. Most of them in Warsaw, Cracow and Tricity. Thanks to this, the office space will increase by more than 1.6 million square metres over the next few years.

– The office sector is one of those that is doing quite well in the current situation. Of course, it also has to face the consequences of the pandemic, such as shifting tenants’ decisions, but in the end, everything remains positive. The demand for modern space in the capital and the largest regional cities is high, so investors are still willing to build in Poland. The banks are also interested in lending these investments, although with slightly more restrictions and more stringent verification of certain aspects. Investors also have to face increased requirements in terms of securing the pre-lease level to get a loan. Before the epidemic it was 30%, and now it reaches 50-60% – says Mikołaj Sznajder, director of office space department in CBRE.

In total, we now have 11.09 million sq m of office space in the whole country, of which 5.58 million sq m is located in the capital and 5.50 sq m in regional cities. However, 96 modern office buildings with a total area of over 1.6 million sq.m are under construction. Of this 41 will be available by the end of this year and another 48 in the next two years.

Virus and remote working for offices not terrible

Demand for modern workspace still exceeds supply, so office investments do not lose their importance. The last months of remote working have shown us how important the common company space is for employees. According to the survey “Work from home survey” conducted by CBRE, 75% of Poles would like to work from home 1-2 days a week. Only 8% would extend this time to more than 3 days a week, and 14% of respondents say a definite “no” to regular remote working.

– The impact of the epidemic and the increase in popularity of remote working are not yet strongly felt on the domestic office market. There is no sign of downtime on construction sites, although it can be expected to happen sooner or later. At the moment, however, there is no indication that the scale of the epidemic will be large. Despite the growing popularity of remote working, there is no turning back from offices to work from home. Some employees and employers have started to notice fatigue from working from home, point out the challenges of lack of personal contact between people and thus appreciate the office space more, so this aspect may even affect greater interest in comfortable and modern space. In this context, the information appearing about the great problems of the office sector in the COVID-19 era refers more to older buildings of medium standard, which are more difficult to find tenants ensuring the stability of lease agreements – says Joanna Mroczek, head of the Market Research and Advisory and Marketing and Communication Departments in Poland and the CEE region in CBRE.

Office trio

The largest number of office buildings is currently under construction in Warsaw, where 35 buildings with a total area of 874,000 sqm are under construction. Kraków, the capital of the coworking industry, where 16 office buildings of nearly 181,000 sq.m are under construction, is the second largest city in the world. Space for the podium has also been given to the rapidly developing office market in the Tri-City, where 13 buildings will arrive by the end of 2022, providing almost 146,000 sq m. The vacancy rate in Gdańsk, Gdynia and Sopot is one of the lowest in the country, which is why office projects are particularly popular there.

Employees from Wrocław (8 buildings under construction), Katowice and Łódź (7 each), Poznań (2) and Szczecin and Lublin, where one modern facility is under construction, can also wait for new office space. In total, office space in regional cities will increase by nearly 743,000 sq.m by the end of 2022.

Source: CBRE

 

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