Poland Warsaw office market stable

Development activity is likely to remain subdued until 2026

At the end of Q3 2024, Warsaw’s total office stock stood at 6.26 mln sqm. Office projects delivered in the three months to September 2024 included Viridis B (Polkomtel, 7,000 sqm) and Bohema Office D and E (2,600 sqm and 1,700 sqm respectively).

There are currently seven projects under construction, totalling 207,000 sqm and scheduled for delivery in the coming years. This volume is well below the average supply levels recorded in 2012-2023. Cushman & Wakefield estimates that approximately 103,000 sqm of new office space will be added to the Warsaw office market this year across nine office buildings.
Ewa Derlatka-Chilewicz, head of Research Poland, Cushman & Wakefield

High borrowing costs and only gradually improving institutional investor activity have significantly dampened office construction in Warsaw. This downturn is likely to continue until the end of 2026. Most projects which are, however, expected to break ground in the next 12-24 months will be in prime locations so that developers can maximize their returns.

The centre of Warsaw continues to attract the largest tenants

Total leasing activity for the first three quarters 2024 exceeded 492,000 sqm, a figure comparable to that posted in the same period last year. This is attributed to the gradual stabilisation on the office rental market and a trend among tenants towards optimising their office footprints. In addition, with 537 office leases finalised in the year to date, take-up in terms of transaction numbers also remained largely unchanged year-on-year. The relatively large volume of signed leases is testament to high liquidity on Warsaw’s leasing market. Occupier activity is expected to remain stable in the coming quarters.
Jan Szulborski, Business Development & Insight manager, Cushman & Wakefield

From January to September 2024, new leases dominated the structure of demand in Warsaw, accounting for approximately 44 pct of all deals, while owner-occupier deals made up 7 pct. Additionally, renewals had a significant share at 42 pct, with expansions contributing around 7 pct to the total leasing volume.

Warsaw saw a strong Q3 in terms of the volume of large leases and an increased share of new leases in total take-up. Renewals continued to account for the vast majority of large lease transactions over 3,000 sqm, while the increased volume of pre-lets, including those signed in the previous quarter in the centre of Warsaw, marked a positive turning point for the market.
Paulina Kopińska, partner, head of Warsaw Office Agency, Cushman & Wakefield

The largest transactions of Q3 2024 included Santander Bank’s pre-lease of 24,500 sqm in The Bridge, a confidential media company’s pre-lease of 10,100 sqm in the Office House and an owner-occupier’s deal for 8,000 sqm in Domaniewska Office Park Beta.

Office availability remains on a downward trend

At the end of Q3 2024, Warsaw’s overall vacancy rate stood at 10.7 pct, up by 0.1 pp year-on-year but down by 0.2 pp from the previous quarter

This equated to nearly 671,000 sqm of unoccupied office space, marking a decrease of approximately 10,000 sqm compared to the second quarter of 2024. With new office supply expected to be constrained in 2024-2026, the city’s vacancy rate is likely to remain on a downward trajectory, enabling the Warsaw market to absorb surplus office space from existing stock.
Jan Szulborski

Vacancy rates also vary by location, with the highest of 12.3 pct reported for non-central zones - a figure similar to levels seen in 2021-2023. In contrast, at the end of September 2024, the City Centre reported a vacancy rate of 8.9 pct, down by 4.0 pp compared to where it was at the end of 2021.

Office location, quality and HICP rate are key drivers of rental growth

The upward pressure on rents on the broad market was driven in the last 24 months by a record high indexation rate for lease agreements indexed to the HICP rate (8.4 pct and 6.2 pct year-on-year for the eurozone in 2022 and 2023 respectively).

In Q3 2024, prime office rents in Warsaw remained unchanged since the end of 2023 and stood at EUR 22.00-26.00/sqm/month in the Centre and EUR 13.50-16.50/sqm/month in non-central locations.