Hitting ten million

By 2028, the country’s total office stock is likely to reach 24 mln sqm. Out of the 10 mln sqm of the existing office space across Poland, almost 5.4 mln sqm is in Warsaw while more than 4.6 mln sqm is in the country’s eight largest regional markets: Kraków, Wrocław, the TriCity, Katowice, Poznań, Łódź, Lublin and Szczecin. Office buildings delivered to the market in the year to date pushed Poland’s total office stock up to this record-breaking volume. The largest completions include Olivia Star in Gdańsk, Sagittarius Business House in Wrocław, Proximo II and Equator IV, both in Warsaw, O3 Business Campus III in Kraków, Spokojna 2 in Lublin and Ktw I in Katowice.

Narrowing the gap “Poland has doubled its total office stock in the space of just eight years to more than 10 mln sqm, which demonstrates the Polish market’s spectacular growth. Warsaw maintains its number one status in Central Europe in terms of office stock, but with Poland’s fast-growing economy, which is reflected for instance by the country’s reclassification to a developed economy, Warsaw is catching up with Western European cities. Poland still needs to narrow the gap, but also has a great deal of potential for growth as it benefits from robust occupier and investor activity. If Poland maintains its current momentum over the next ten years, it will see its office stock top 24 mln sqm, only slightly more than the total office stock of Munich, which is the largest German office market,” points out Tomasz Buras, the managing director of Savills Poland.

More than half of Poland’s existing office stock has been developed over the past ten years. Over this period, Warsaw has nearly doubled its office space while office stock in regional cities has risen almost threefold since 2008. By comparison, over the same period Madrid saw an 8 pct increase from 12.1 mln sqm to 13.1 mln sqm; Berlin expanded from nearly 18.4 mln sqm to almost 19.6 mln sqm (a 7 pct increase) and Brussels grew from 12.8 mln sqm to 13 mln sqm (up by 2 pct). Warsaw, however, still has less than half the amount of office space of Vienna or Stockholm, and less than a quarter of the office space in Munich. Poland’s capital city is ranked between Amsterdam (6.1 mln sqm) and Dublin (3.7 mln sqm).

With office take-up at 820,000 sqm in 2017, Warsaw came fourth among core European cities – seeing more robust leasing activity than such developed markets as Frankfurt, Oslo and Madrid.

Only ten years ago, Warsaw’s office stock was more than double the total size of Poland’s core regional cities (2.9 mln sqm vs app. 1.4 mln sqm). At that time, Poland had less office space than its regional cities have today. In the last five years, regional markets have, however, seen higher annual supply levels than Warsaw. The combined office stock of Kraków, Wrocław, the TriCity, Katowice, Poznań, Lublin and Szczecin currently accounts for around 46 pct of Poland’s total office space, and is only around 0.8 mln sqm short of Warsaw’s.

Polish offices still on the march

In the last decade, it was 2016 that was the record year in terms of new office supply, which reached 893,600 sqm across Poland. It had the largest ever volume of new office space constructed within a year both in the regions and in Warsaw.

“The growth of the Polish office market shows no sign of abating in the near future. As time goes by, existing buildings are likely to pose a growing challenge. Office buildings completed ten years ago are now entering their third leasing cycle in many locations. In countries that have more mature office markets than Poland such office buildings would not be considered old. In Poland, however, such developments are not only being upgraded but are also being increasingly singled out for demolition. Such buildings are cost-intensive and require a considerable commitment from property managers and landlords. But some investors are keen to pursue value-add opportunities. This is the price of being a mature market that is growing increasingly competitive and demanding as it continues to develop,” adds Tomasz Buras of Savills.

"Still, this is not much in comparison to other European capitals. Taking into consideration tenant activity and developers’ plans, in both Warsaw and regional cities, we predict that in 2028 there should be 24 mln sqm of office space," believes Dariusz Karwański, an associate director in Savills’ office agency.