Country Spotlight: Poland

The Polish commercial real estate market is on a strong upward trend, 2017 was a record year for the country’s commercial property investment market exceeding €5.1bn, with this year expected to be even better. The first quarter of 2018 closed with a record investment volume of €2.05 bn, showing confidence behind the positive predictions for the rest of the year.

The country’s economy is strengthening rapidly, unemployment reached the lowest level in 26 years in Q4 2017 at 6.5%, improving business and consumer confidence. This strength is forecasted to continue growing annually and at pace. JLL has reported that over the next 2 years, GDP is expected to grow twice as fast in Poland compared to the rest of the Eurozone making the country a hotspot for investors!

The office market is booming – especially in the capital. Knight Frank reported that in Q1 2018, the area of lease agreements reached over an impressive 202,000 sqm. There is strong occupier demand through new-comers and international companies opening offices, expansions from current businesses and tenants relocating to new, modern developments. Some prominent deals include:

• AstraZeneca not only renewed its lease at Postepu 14, the company took an additional 6,200 sqm – almost doubling their space!
• J. P. Morgan has rented a 15,500 sqm office space in Atrium Garden where they expect to hire 2,500 employees.
• Cambridge Innovation Center (CIC), a US real estate services company has a lease agreement for a 14,000 sqm space in Varso 2 (part of the Varso Place complex currently under construction).

There is increased demand for flexible and co-working environments, accounting for 21.5% of the total office demand volume in central areas. The co-working concept is not unique to Poland, it is a widespread trend that is being driven by new generations demanding different ways of working, businesses needing the flexibility to grow and landlords maximising space.

There is an increasing demand for office space which is outweighing the decreasing vacancy rate. This is leading to landlords increasing rents and pressure rising on developers to deliver more and quickly.

In Q1 2018, two office schemes were delivered to the Warsaw market: the Europejski building (7,000 sqm, H.E.S.A.) in the Central Business District, and the Graffit project (16,000 sqm, Hines Polska) in the Służewiec district. Colliers has reported that 1.8million sqm of modern office space is under construction with over 770,000 sqm of the projects in Warsaw. The largest scheme in the pipeline is Varso, the tallest building in Poland and the European Union, scheduled to provide nearly 140,000 sqm once completed and delivered to the market in 2020.

It’s not just the office market that is buoyant, there is activity across all asset classes. The country is rising in popularity as a tourist destination, supporting the economy and having a positive impact on investment in the hotel sector. The retail market is showing positive momentum and the residential market is showing strong demand.

The country’s showing strength and has displayed an impressive performance so far this year with interest and popularity showing no signs of deteriorating. I’m looking forward to watching the market grow further over the course of the year.