All reports

REDD Insights: Office Market Trends, H1 2024

What is the office market like in 2024? Did the first six months bring significant changes or set noticeable trends in the industry? We analyzed properties located in Warsaw, Krakow, Wrocław, Tricity, Katowice, Łódź, and Poznań. Are you curious about our findings?

In the first half of 2024, we observed a continuation of trends from 2023. Few new office spaces were introduced to the market, several properties were demolished, and the total area of buildings under construction decreased compared to the end of last year. As a result, there was no significant increase in the total office space in major cities.

Rental rates in office buildings continued to rise, with an average year-over-year increase of €0.04/sqm. Notably, Class B buildings saw the largest increase of €0.38/sqm, while Class A buildings had a modest rise of €0.11/sqm.

“Given that service charges continue to rise, the increase in rental rates seems to be a natural consequence” – comments Krzysztof Foks, Head of Research at REDD Group.

Looking at specific figures, during the first six months of 2024, the average service charge increased by 0.1 PLN/sqm. In Class A buildings, the charge rose by nearly 0.9 PLN/sqm, while in Class B buildings, it increased by as much as 1.23 PLN/sqm.

In the first half of the year, only a small number of office buildings were completed, with just 60,000 sqm delivered across five buildings. The majority of this supply (over half) was in Warsaw, where 30,000 sqm was added in three buildings. Krakow gained one new project (13,000 sqm in Brain Park Building C), and Wrocław saw the completion of Quorum Building A (16,800 sqm).

The average time needed to lease office space, measured by the proprietary REDD Index, ranged from 416 to 450 days in 2024, higher than the 395 to 439 days observed in 2023.

THE RENTAL MARKET IN THE FIRST HALF OF THE YEAR THROUGH THE EYES OF EXPERTS

“In the first half of 2024, CPI Property Group’s office leasing team successfully leased more than 50,000 sqm of space, achieving an excellent result. Today, clients value partnerships with landlords and attentiveness to their needs even more than before. These elements significantly influence decisions to extend current leases, as evidenced by a recent transaction with a global consulting firm that decided to remain in the myhive Nimbus building, occupying 7,300 sqm. However, quality service is essential to underpin business relationships. Tenants and their staff appreciate an accessible, committed, and responsive leasing and management team. Additionally, tenants increasingly expect measures that enhance the value of their buildings, such as modernization, new technology investments, energy efficiency solutions, and reduced operating costs. A well-maintained and well-managed building serves as the owner’s best business card. Clients also pay attention to the landlord’s approach to sustainability and the introduction of solutions for the well-being of office users. For CPI Property Group, these include building certification and thermal comfort upgrades, environmentally friendly initiatives, building community integration campaigns, workshops, and other solutions aimed at improving the workplace atmosphere. Over the past few years, there has been increased interest in flexible spaces and rental-ready concepts in the Warsaw office market. It is important that these spaces are equipped, furnished, and fully serviced. Our myoffice and mycowork serviced offices, which provide comprehensive yet flexible space tailored to specific company needs, are very popular with tenants. These spaces are now available in key business districts most favored by clients, such as the Centre, near Wola and Ochota, and Służewiec.” – comments Agnieszka Ostrowska, Associate Director Leasing Office, CPI Property Group

 

“The demand for serviced offices is rebounding with increased vigor after the pandemic era. This trend responds to companies’ expectations, as many find their current offices too large and underutilized in the age of hybrid working (not to mention the lack of flexibility). Serviced offices offer cost savings and flexibility, allowing companies to pay only for the space they use and adapt it to their current needs. Additionally, all services (such as reception, internet, and cleaning) are bundled into a monthly subscription with one invoice, enabling companies to focus on their core business without managing property operations. Clients seek comprehensive solutions with no hidden costs and prioritize location, design, intimacy, and service quality. The outlook among serviced office operators is optimistic, as evidenced by the opening of new locations by existing brands and the entry of new concepts into the market. However, the real estate market still requires significant education about the benefits of flexible offices compared to traditional ones.” – comments Oskar Odziemczyk, Managing Partner, Co-Founder, The Shire. 

 

Access the full report by completing the form provided below.