Poland Office and investment market, Q1 2020

The effects of the COVID-19 pandemic on regional office markets are only partially noticeable after the first three months of 2020. High tenant activity was still visible – the transaction volume in Q1 2020 was almost 70% higher than in the corresponding period of 2019. That said, new supply volume was nearly 40% lower than in Q1 2019, although it stood at a level comparable to the previous quarter. The lower than expected new supply volume is a result of construction site delays due to government restrictions aimed at slowing down the spread of COVID-19. At the same time, developers remain active, and at the end of March 2020, over 1m sq m of office space was still under construction. It is therefore expected that the coming quarters will see the completion of numerous office projects. Due to the delivery of mostly fully leased projects, there was a further decrease in the vacancy rate, and at the end of Q1 2020, it stood at 9.4%. Furthermore, in some buildings, a slight decrease in asking rents was seen, although a clearer picture of the scale of the epidemic’s impact on the office real estate market will emerge in the second half of 2020.