According to the “Office Occupier: Office Market in Tricity Q1-Q4 2022”, a report published by real estate advisory firm Newmark Polska, Tricity is Poland’s fourth-largest office market, attracting consistently more tenants and expanding its office stock. In line with the trends across Poland, developers in this region, have recently become more cautious about commencing new projects, which has resulted in less office space being built. At the end of December 2022, Tricity’s vacancy rate stood at over 13%.
“At the end of Q4 2022, the Tricity office market contained over 1.01 million sqm, having expanded by 5% over the year. This saw Tricity join the ranks of Warsaw, Krakow and Wrocław, each of which has office stock in excess of 1 million sqm. In 2022, 50,600 sqm was delivered to the Tricity market, marking a fall of 31% on 2021,” says Michał Rafałowicz, Regional Director at Newmark Polska.
Last year’s new supply comprised office completions in Gdansk: Format (Q1, 16,000 sqm), Airport City Gdańsk Alpha (Q1, 8,500 sqm), Palio Office Park B (Q2, 7,850 sqm) and Officyna II (Q1, 7,300 sqm), and K2 in Gdynia (Q2, 10,900 sqm). All these projects came onto the market in the first half of 2022.
Development activity has slowed in Tricity since the fourth quarter of 2021. While in 2016-2020 Tricity’s stock under construction averaged around 150,000 sqm annually, at the end of Q4 2022 it amounted to approximately 81,750 sqm, of which 58% was underway in Gdansk (47,650 sqm) and the remaining 42% in Gdynia (34,100 sqm). This represents a decrease of 56% on the record commenced space volume of 186,300 sqm in Q4 2017.
Funding constraints and persistently high general construction costs have undoubtedly left their mark on the Tricity office market. The largest projects underway include two buildings of the second phase of Gdynia Waterfront with a combined area of 14,500 sqm in Gdynia, and three office buildings in Gdansk: C300 (13,750 sqm), .PUNKT (12,800 sqm) and Palio Office Park C (12,600 sqm).
“Occupier activity in Tricity finished the year with close to 101,000 sqm of signed office deals, the third highest in the history of this region. Only three cities were ahead of Tricity for total take-up: Warsaw (860,000 sqm), Krakow (198,100 sqm) and Wrocław (137,200 sqm). Although leasing activity was down by 6.5% year-on-year, Tricity’s demand has remained very stable since 2015, averaging around 98,000 sqm annually,” says Agnieszka Giermakowska, Research & Advisory Director, ESG Lead, Newmark Polska.
In 2022, new office leases accounted for 67.8% of the total take-up, followed by renegotiations and expansions which made up 21.4% and 10.8%, respectively. The highest concentration of leasing activity was in Gdansk, which saw 81,900 sqm transacted, accounting for 81% of all deals finalized in Tricity last year, with the remaining 19%, or 19,100 sqm, leased in Gdynia.
One of the most active tenant sectors on the Tricity office market is business services. With 184 service centres, this region is the fourth-largest hub for business services in Poland, just behind Warsaw, Krakow and Wrocław.
At the end of Q4 2022, Tricity’s vacancy rate stood at 13.3%, down by 0.2 pp on the third quarter but up by 1 pp year-on-year. Absorption is expected to accelerate in the coming quarters, driving office availability down. Unoccupied office space in Tricity currently amounts to over 134,000 sqm.
Office rents in Tricity came under increased upward pressure in 2022. This was most notable for new office developments due to rising financing costs and general construction costs.
“2023 will be a year of rent indexation and service charge growth. Consequently, office buildings featuring cost optimization solutions, including those related to ESG, will be most sought-after by tenants,” adds Agnieszka Giermakowska.
About Newmark Polska
Newmark Polska, a Newmark Global Partner, is a member of the Newmark Global Network. As one of Poland’s premier integrated commercial real estate services companies, the group provides conflict-free tenant representation, in addition to capital markets, market research and advisory, valuation, design and project management and workplace strategy services. Newmark Polska is led by Piotr Kaszyński, based in Warsaw, with additional offices in Wroclaw, Tricity and Krakow. The team leverages Newmark’s (Nasdaq: NMRK) global platform, which offers a comprehensive suite of services that seamlessly powers every phase of the property life cycle from offices around the world. To learn more about Newmark Polska, visit: www.nmrk.pl
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