Record supply in the office market in Q1 2022

The beginning of 2022 was characterized by a record level of new supply in eight major regional markets in Poland. In the first quarter, a total of 244,000 sqm of office space was delivered, nearly 20,000 sqm more than in the whole of 2021. JLL experts stress that the peak of new supply in these cities is still ahead of us – in the next three quarters, developers plan to deliver an additional 200,000 sqm of space for lease.

The significant increase in new supply has contributed to an increase in the vacancy rate, which stood at 15.5 percent at the end of the first quarter of 2022 in the eight major regional markets. This represents an increase of 2.9 p.p. compared to the first quarter of 2021 and 1.4 p.p. compared to the fourth quarter of 2021. In the following quarters of 2022, JLL experts forecast a further upward trend in vacancy. This is a result of the high level of new supply compared to demand, which is only gradually recovering from the changes caused by the COVID-19 pandemic.

In the first quarter of 2022, gross take-up in the eight major regional markets totalled 153,500 sqm. This represents a 57 percent increase compared to the same period in 2021. New deals and expansions together accounted for 78 percent of total activity. Renegotiations accounted for 22 percent, a sizable decrease compared to the average recorded in 2021 (43 percent). 

"The continuing trend of tenants relocating to new office buildings, which has further gained momentum in the last two years, is sure to translate into increasing market polarization. In the coming quarters, older office properties will face an outflow of existing tenants to newly completed projects, which will contribute to increasingly high vacancy rates," Karol Patynowski, JLL, assessed.

(WBJ)