Poland Tenants prepared to stay longer

Due to the low supply of office space, subleases could disappear from the market. A large portion of transactions are lease renegotiations, and new buildings are already 70-90 pct occupied upon completion.

Greater Tenant Flexibility

New tenants in the market will often use flexible office space, which is currently around 90 pct occupied. They use the time spent there to better understand the market, both the space available and their employee expectations. Some companies wait for new projects to emerge, while others choose to stay in flex locations for longer. When vacant space in the city centre is lacking, some organisations are considering more distant locations, although most still prefer to wait in flexible spaces rather than relocate to the outskirts of cities, where it's harder to attract employees.

Extending Lease Agreements

Due to the high costs of fit-out, companies are increasingly opting for longer leases, which allow for a higher contribution towards the fit-out costs. Organisations are less concerned about long-term commitments than they were just a few years ago.

Location now a Priority

Asking rents have increased, but rent often accounts for a lower percentage of total company expenses than it did five years ago, which is why companies prefer to pay more for a better location. For smaller organisations, it's not crucial, but large brands prefer downtown locations, both in Warsaw and regional cities. Location decisions are largely driven by HR departments. If a company has employees in northern Poland, it might consider Gdańsk. If it needs a large number of specialists, it heads to Warsaw. The availability of talent is key, and office costs are becoming less important.

Supply Shortage in the Coming Years

Currently, we are seeing a revival in investment in the office market. There is greater activity, with capital arriving from countries such as the Czech Republic and Scandinavia. Easier access to capital and lower interest rates make investing in Poland more attractive. More developers are expected to embark on new office projects. However, the office development remains lengthy, so for the next three years, the market will struggle with a shortage of modern office space, which in turn will impact rents.

Vacancy rates in Warsaw are particularly low. For companies seeking space over 5,000 sqm, finding the right office can be a significant challenge. Therefore, companies need to begin their search much earlier. Adapting office space to the needs of employees will remain a challenge. Employers, on the other hand, by providing better working conditions, will expect their employees to be work more from the office.