Colliers International sums up 2020 in Polish office market

Due to the ongoing epidemiological threat, most office workers still work from home. Despite the economic slowdown in the office market, high developer activity continues. Since the beginning of the year, approximately 600,000 sqm has been commissioned in Poland, of which 238,000 sqm in Warsaw as part of 12 projects. The largest of them is The Warsaw Hub B and C (89,000 sqm in total), Varso II (39,900 sqm), and Chmielna 89 (25,200 sqm).

"The result for 2020 is 47 percent higher than the total new supply registered in 2019. And this is not the end. By the end of the year, the supply on the Polish office market may increase by another 165,000 sqm. Importantly, the delivered projects are significantly leased," Dominika Jędrak, director of the Advisory and Market Research Department at Colliers International, said.

In her opinion, we observe a significant increase in the share of renegotiations in the structure of concluded lease agreements. In the third quarter, they accounted for as much as 48 percent of all contracts signed on the Warsaw market. Compared to the corresponding period of 2019, this is an increase by as much as 19 pp. In regional markets, the largest share of renegotiations was recorded in Kraków and Wrocław.

"Tenants suspend relocation decisions and extend their contracts for 3-5 years on favorable terms in current locations. Many companies, looking for savings, decided to sublet some of their office space," Paweł Skałba, senior partner, director of the Office Agency Department at Colliers International, added.

At the end of the third quarter, 106,000 sqm was available in Warsaw under sub-lease offers, which accounted for almost 2 percent of the existing supply. According to experts from Colliers, another over 100,000 sqm is available for sublet in regional markets.

Despite the reduced demand, record transactions took place in the office market in 2020. In Warsaw, under a pre-let agreement, PZU leased 46,600 sqm in the Generation Park Y building. The largest transaction on the regional markets was the renegotiation of the contract for nearly 30,000 sqm in the West Gate and West Link office buildings in Wrocław by Nokia Siemens Network. The second-largest agreement on the regional markets was the renegotiation of 20,000 sqm in the Axis project in Kraków for ABB. The podium in the regions is closed by a pre-let agreement signed by Fujitsu Technology Solutions for the lease of 16,300 sqm in the mixed-use complex Fuzja, under construction, in Łódź.

(WBJ)