Time to resume lease processes in Wrocław office market: Savills

According to Savills data, Wrocław’s office stock surpassed 1.2 million sqm at the end of 2020. The city retained its position as Poland’s second-largest regional city office market. Only Kraków and Warsaw have more office space. In 2020, office completions amounted to 58,500 sqm, the lowest in three years. This fall in supply was not, however, caused by Covid-19, as this was the level of completions planned before the pandemic began.

“Tenants have been stalling relocation decisions for a long time. Although a large proportion of employees continue to work remotely, conditions are paradoxically ripe for companies to begin thinking about where and how they would like their employees to work in the coming years. Tenants may now demand much larger lease incentives during lease negotiations,” Michał Grabikowski, Regional Manager, Office Agency, Savills Wrocław, said.

Savills notes in its latest report that only one office project broke ground in Wrocław during the pandemic. Vacant space in office buildings completed in 2020 accounted for as much as 50 percent of their floor space when they were given occupancy permits. Due to the pandemic, financial institutions are considerably more cautious about financing new office build and developers have become less willing to commence new construction.

At the end of December 2020, the development pipeline comprised more than 111,000 sqm of office space, most of which was under construction in the southern part of the city, along Powstańców Śląskich Street. This area has recently gained importance and is expected to maintain its growth momentum in the coming years, says Savills.

As the market remains mired in uncertainty, the percentage of relocations has fallen sharply in Wrocław. In 2020, regearing accounted for as much as 52 percent of the transaction volume compared with the average for the previous three years at 32 percent. Last year’s leasing activity amounted to approximately 128,500 sqm, representing a 4 percent increase on the previous year. Net take-up, exclusive of renegotiations, was considerably lower at 59,900 sqm (down by 24 percent y/y).

(WBJ)