International advisory firm JLL has conducted comprehensive analysis of office lease transactions signed over the course of 2015. Poland saw 1.5 million m² of modern office space leased. The highest amount – 834,000m² – was leased by companies in Warsaw, followed by 226,200m² in Kraków and 127,600m² in Wrocław.
Anna Bartoszewicz-Wnuk, head of research and consulting at JLL, explained: “A lot was happening on the Polish regional markets, in which we recorded a substantial increase in take-up for modern office space. Compared to 2014, demand in Tri-City increased by 61%, while in Kraków it grew by 56%, in Łódź by 53%, in Wrocław by 34% and in Katowice by 29%. Poznań had a particularly impressive performance in 2015, with signed lease agreements of ca 65,000m² - a threefold increase on 2014.”
The biggest lease agreements were concluded in Łódź (mBank; new location, 24,000m²), Kraków (Shell; business services centre, 22,000m²) and Warsaw (IT company, R&D centre). Companies from the services, telecommunication, IT and banking/finance sectors leased the highest amount of office space. These were followed by manufacturing companies and insurance companies. The public sector leased a total of 75,000m² throughout Poland last year.
According to Karol Patynowski, associate director, tenant representation at JLL, companies have increasingly specific expectations regarding occupied space. They are aware that well-designed and employee-friendly offices can be a bargaining chip in the competition for young talent.
Patynowski added: “Companies seeking modern space not only assess the financial aspects but also look to provide their employees with conveniently located offices, with good access to public transportation and numerous amenities. Modern design, comfortable working places adjusted to the needs of employees, bicycle parking racks, spacious kitchens along with creative spaces for team work are only some of the elements through which employers can successfully attract the best candidates.”
In 2015, 22% of contracts signed were for over 10,000m², followed by companies leasing space between 2,000 to 5,000m². As for the structure of lease agreements, 38% of deals consisted of new lease agreements in existing buildings, while 29% were renewals, 21% were pre-lets and expansions comprised 9%.
Anna Młyniec, head of office agency and tenant representation at JLL, concluded: “We are happy with the high activity of tenants searching for modern offices that offer good value for money. In 2015, JLL advised on office lease agreements totaling 285,000m². This accounts for the highest -25% - share in overall volume of transactions signed with participation from advisory firms. This is also the largest amount of square meters ever leased by the agency in one year on the Polish market. Currently, there is nearly 1.5 million m² of modern office space under construction in Poland, including 700,000m² in Warsaw, 184,000m² in Wrocław and 183,000m² in Kraków. Companies planning relocations are spoiled for choice.”
In terms of investment volumes, the office market experienced decline, with Savills reporting that office transactions in 2015 amounted to around €1.3bn, almost 27% less than the year before. With significant supply entering the Warsaw market, putting rental levels under pressure, investors have moved towards exploring regional cities. More than half of the sector's volume last year accounted for office properties located outside Warsaw. Savills anticipates, however, that 2016's volume of office transactions in Warsaw may outpace regional markets, as a few larger properties in Warsaw city centre may be transacted.
