JLL is upbeat on Warsaw office yields and rental growth, driven by record level investment volumes and net absorption.

Poland is the largest office market within the CEE region with Warsaw the key hub. The market is spread to seven key cities, a similar market structure as in Germany. Warsaw makes up for about half of office space (5.5m sqm), followed by Krakow (12%) and Wroclaw (10%).

The vacancy rates for the top three cities are falling but currently they are still in the 8.5-10.1% range. High construction activity has slowed the falling vacancy rates and the amount of total office stock is expected to increase by around 5% per year for the next three years.

Prime rents are now €24sqm/month in Warsaw and €15 in Krakow and Wroclaw. JLL expects increasing headline rents on strong tenant demand.

Office investment markets in Poland have been strong in recent years with record volumes (€3.5bn expected this year, €2.7bn in 2018, €1.5bn in 2017), dominated by international investment and prime yields of 4.75% in Warsaw and around 6.0% in Krakow and Wroclaw.