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Warsaw, Tri-City, 17 May 2013 – Jones Lang LaSalle has published Tri-City Office Market Report, summarising Q1 and analysing key trends for the coming months. Set out below are the key findings from the research paper:
Supply: Tri-City is the largest office market in Northern Poland and ranks fourth nationwide in terms of office stock, behind Warsaw, Kraków and Wrocław. The total office space in Tri-City is currently estimated at 409,000 sq m, with 31,600 sq m delivered in Q1 2013. Gdańsk remains the leading office destination in the region, accounting for more than 60% of office space in Tri-City, followed by Gdynia (30%) and the tourist-driven Sopot (10%). Currently, there is approximately 80,800 sq m of modern office space under construction in the entire Tri-City. The majority of this is in Gdańsk, with more than 68,000 sq m. Nearly 53,000 sq m (61% of this is secured with pre-lets) should be delivered between Q2-Q4 2013 and an additional 63,000 sq m in 2014.
Demand: In Q1 2013, more than 12,600 sq m was leased in the region, approximately 7,000 sq m were new deals. Major renewals signed in Q1 2013 included: Geoban (2,800 sq m in Łużycka Office Park), Acxiom Polska (1,600 sq m in Garnizon.biz) and First Data Global Service (1,200 sq m in Arkońska Business Park). Other significant lease transactions concluded in Q1 2013 were: LPP (expansion of 1,200 sq m in Artus Park) and Allianz (a new deal of 1,000 sq m in Olivia Tower).
Vacancy rate: At the end of Q1 2013, more than 56,000 sq m was vacant, which equates to a vacancy rate of 13.7%. Significant availability of office accommodation (over ten buildings offer vacant space over 1,000 sq m and six over 5,000 sq m) is beneficial to tenants, particularly those from the BPO/SSC sector, who typically require larger floor plates (over 1,000 sq m), offering the opportunity to expand in the future. With observed robust development activity, the vacancy rate may increase further as new office buildings are delivered.
Rents: At the end of Q1 2013, headline rents in Tri-City stood at €12 to 14 / sq m / month, however, additional incentives offered by landlords cause lower effective rents. Compared to the other largest office markets in Poland, rents in Tri-City are at attractive levels. We are of the view that office market conditions will most likely remain tenant-favourable in both 2013 and 2014.
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