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In 2021, companies signed traditional leases for a total of 646,500 sq m, a 7% increase on
2020. In the fourth quarter, tenant activity was roughly on a par with the first half of 2021. As a
result of the pandemic, companies are taking a decidedly more conservative approach to
leasing space - renegotiations now account for 45% of total office take-up volume, the highest
annual figure on record. The ongoing processes, together with the growing interest in the
Warsaw market from companies in the modern business services sector, may positively
influence the volume of lease transactions in the following months.
2021 saw all four quarters affected by the COVID-19 pandemic. Although the number of
companies implementing a hybrid working model, e.g. in the 3+2 formula, began to increase
in the first three quarters of this year, with the next wave of the pandemic, the last three months
of the year saw a return to a predominantly work-from-home (WFH) model.
The current situation also directly affects the vacancy rate, which is at its highest level since
October 2017. At the end of 2021, it was 12.7% (12.9% in central zones and 12.4% outside
the centre), an increase of 2.8 p.p. year-on-year, and 0.2 p.p. compared to the previous
quarter. A gradual decrease in the vacancy rate is expected in the following years.
In 2021, the highest transaction rents for prime office properties were stable and at the end of
the year ranged between 18 - 24 €/sq m/month in the city centre and up to 16 €/sq m/month
outside it. In the next few years, however, we expect rental rates to rise, particularly in prime
office buildings. Rates are set to rise in 2022, along with significant changes in market
dynamics. This trend will continue, especially in 2023, as a result of an expected gap in new
supply, which will lead to rental opportunities being severely limited in newly added buildings.
Regional cities Poland
Throughout 2021, the largest new supply volume was recorded in Tri-City (73,200 sq m),
Kraków (60,700 sq m) and Poznań (37,500 sq m). Currently, 870,000 sq m of office space is
under construction across the major region/al office markets in Poland, of which approximately
400,000 sq m is planned for completion in 2022.
After relatively weak take-up results in the first 9 months of 2021, Poland’s major regional office
markets recorded a strong end to 2021 with 214,600 sq m leased in the last quarter. As a
result, gross demand in 2021 totaled nearly 595,000 sq m and was on a par with 2020’s levels.
As in the previous year, regional cities recorded a high share of renegotiations of current lease
contracts, standing at 43% of total volume in 2021. It was the contract extensions that
constituted the largest transactions concluded in the last 12 months, including 24,000 sq m for
a tenant from the IT sector in Green Horizon in Łódź, 17,400 sq m for a company from the
financial sector in the Business Garden complex in Poznań and a total of over 23,000 sq m
renegotiated by an IT company in Kraków and Wrocław.
The second year of the COVID-19 pandemic did not see any major breakthrough on the office
real estate market. Despite the extensive roll-out of the vaccine programme, new COVID-19
variants stopped the expected large-scale return to the office. Many companies continued to
recommend remote work; however, due to the negative effects of long-term working from home
(WFH), the hybrid model has now become the new market standard.
At the end of the fourth quarter of 2021, the vacancy rate for the eight main regional markets
was 14.1%, an increase of 1.4 p.p. on the same period in 2020. During 2021, rental rates for