Development activity in regional cities also remains low. Approximately 192,000 sqm remains under construction, down 11% y/y and a result well below the 2020-2024 average of more than 520,000 sqm. The largest number of investments is under construction in Krakow (55,400 sqm) and Poznań (49,600 sqm).

Total leasing volume from January to the end of September amounted to 521,800 sqm, up 6% compared to the same period last year. The highest activity was recorded in Krakow (203,900 sqm), Wroclaw (107,400 sqm) and the Tri-City (71,700 sqm). An analysis of the demand structure shows that most, as much as 20%, was generated by companies from the IT sector, responsible for leasing 105,000 sqm. Business service centers and manufacturing companies accounted for 16% of the demand equally each.

Despite strong tenant interest, there is a noticeable increase in the vacancy rate, which now averages 17.7% (up 40 bps y/y). Szczecin (6.8%) and Lublin (10.3%) have the lowest vacancy rates, while Wroclaw (21.8%) and Katowice (23.4%) have the highest.

– Regional office markets are currently undergoing a phase of adjustment to the new economic reality. Sustained interest in contract renegotiations indicates that tenants are seeking to optimize their space leasing strategies while maintaining flexibility – comments Jaroslaw Pilch, Head of Tenant Representation, Savills.

The demand structure is dominated by contract renewals (54% of transactions), while new leases – including owner contracts – account for 38%. A small share (2%) is accounted for by pre-lease transactions. In addition, there was a 6% share of expansions.

– Market dynamics largely depends on macroeconomic stability and the availability of investment financing. In the perspective of the next two years, we expect developers to maintain activity at a level similar to the current one – notes Daniel Czarnecki, Head of Landlord Representation, Savills.

Prime rents for A-class offices remain relatively stable, ranging from 11.50 to 17.00 EUR/sqm/month. The highest prime rates are in Poznań and Kraków (EUR 17), and the lowest in Lublin (EUR 14.50). The average service charge is in the range of PLN 20-35/sq.m./month.

The report indicates that Poland’s regional cities are maintaining their position as attractive locations for service centers, IT companies and modern industrial sectors, which are driving demand for well-located, high-standard offices.