Office Market Polarisation Accelerates: Tenants Compete for Prime Locations While Older Buildings Struggle to Remain Competitive

The most important trend across both Warsaw and the regional office markets is the clear polarisation of the sector. Occupiers are increasingly focusing on the best buildings and locations, while older properties are finding it more difficult to compete for demand. This is particularly evident in the rental gap between prime city-centre assets and buildings located in secondary office locations, with the trend being especially visible in Warsaw.

At the same time, the office market continues to operate in an environment of constrained supply. In regional cities, pre-let agreements have become relatively rare. While such transactions still take place, their volume remains significantly below the levels seen several years ago.

We are also seeing a growing number of strategic relocations. Just a few years ago, companies typically relocated to buildings located close to their existing offices.

Polish office market increasingly favours prime locations

Today, relocation most often means moving from non-central districts to city-centre locations. Occupiers are willing to accept higher rents and longer lease commitments in exchange for higher-quality office space, modern buildings, a better working environment and a broader range of amenities.

Although occupiers continue to optimise their office footprints, reductions in leased space are generally modest. At the same time, companies are upgrading the quality of their workplace environments. This has been a consistent trend since the pandemic.

Office design is also becoming increasingly important. Companies are moving away from large open-plan layouts in favour of a greater number of smaller meeting rooms, team offices, private offices and spaces dedicated to one-to-one meetings. Today, the office is expected to attract employees, support productivity and serve as the heart of the organisation.

Modern office space is becoming increasingly difficult to find

One of the most interesting developments is that, despite relatively high vacancy rates across regional markets, finding suitable office space is becoming increasingly challenging. While the overall volume of available space remains substantial, the number of attractive offices meeting occupiers’ requirements is significantly lower.

The greatest shortage can be seen in modern Grade A office space located in central business districts, offering high technical standards, environmental certifications and a comprehensive range of amenities.

Although average vacancy rates across the regional office markets currently stand at around 17%, a significant proportion of available space is located in older buildings that no longer provide the quality or surrounding environment expected by occupiers. Properties lacking modern amenities and located outside the most desirable office districts are becoming increasingly difficult to lease.

Today, facilities such as gyms and restaurants are no longer considered a competitive advantage, but rather a minimum market standard. Occupiers are also paying close attention to the availability of retail services, medical facilities, conference centres, flexible workspace solutions, green areas and the broader environment surrounding a building.

Occupiers compete for the best office space

In practice, this means that despite seemingly high availability levels, occupiers often face a very limited choice. In some cases, a tenant may have only one available office space that meets all of its requirements. In Warsaw’s best office buildings, it is not uncommon for two or even three companies to compete for the same space.

Among the largest office transactions completed during the first half of the year were:

• Brown Brothers Harriman signing a new lease agreement for 13,700 sq m in the WITA C complex in Kraków;
• Enea Group extending and expanding its occupancy to 11,500 sq m in Business Garden Poznań;
• Adtran renewing its lease for 6,800 sq m in the Tensor Y office building in Gdynia.

In Warsaw, significant relocation and renegotiation processes were also undertaken by occupiers including PwC, Visa and Santander/Erste, while Poczta Polska decided to extend its lease agreement.

A particularly interesting example is the office lease signed by PwC in a new office development in Warsaw, with occupancy scheduled for 2029. This demonstrates both the limited availability of prime office space and how far in advance the largest occupiers are now making location decisions.

Prime headline rents in regional office markets currently reach approximately EUR 19-20 per sq m per month, primarily in the best buildings within the most attractive locations.

However, we do not expect a sharp increase in rental levels. Owners of prime office projects currently enjoy a stronger negotiating position due to the limited supply of modern office space, but rental growth should remain moderate.

Office quality increasingly outweighs rental cost

Increasingly, occupiers are willing to accept higher rental rates while simultaneously optimising their space requirements. For many companies, office quality, location and the ability to provide an attractive working environment are becoming more important than rental costs alone.

We expect occupier activity to increase during the second half of the year. Particularly encouraging is the growing share of new lease agreements, which are contributing to higher net absorption. In the first half of 2026, net take-up in Poland’s regional office markets increased year-on-year despite lower overall leasing volumes compared with the previous year.

Companies will continue to make relocation decisions, but any move must deliver a clear business benefit. Occupiers are no longer relocating within the same neighbourhood simply because it is operationally convenient or cost-effective. Increasingly, they are choosing central locations to strengthen brand visibility, attract talent and encourage employees to return to the office through better amenities and workplace experiences.

The trend towards slightly smaller but higher-quality office space is expected to continue. We also expect further consolidation processes, as illustrated by transactions involving companies such as Erste.

Office market polarisation is set to continue

Looking ahead, we expect the polarisation of the office market to continue. Prime buildings will maintain strong occupier demand, while older properties will increasingly need to undergo refurbishment programmes or offer more flexible lease conditions and additional incentives in order to remain competitive.

We do not anticipate significant rental growth. In the best projects, moderate rental increases may occur, driven by constrained supply and sustained demand.

Development activity remains limited, and there are currently no signs of a return to the scale of office development recorded in regional markets before 2024 or in Warsaw before 2023.

Developers and investors continue to approach new office projects with considerable caution. Every new development is now preceded by detailed feasibility assessments, and market conditions remain challenging for speculative construction. The main exception continues to be prime city-centre locations in major cities, particularly Warsaw, where occupier demand remains strongest.

Office space is increasingly being analysed as a component of mixed-use developments rather than as a standalone asset class. For older office buildings, owners are expected to focus on refurbishment programmes, quality improvements and expanding amenity offerings.

Large office relocations require years of advance planning

An additional challenge is the limited availability of large office units. For occupiers seeking approximately 8,000 sq m of office space, the delivery timeframe for a suitable new product may extend to as much as three years. As a result, the largest occupiers are increasingly planning relocations well in advance.

Autor

Karolina Słysz
Head of Regional Markets,Office Advisory,
AXI IMMO

About AXI IMMO

AXI IMMO offers comprehensive advisory services related to commercial real estate, including warehouse and office leasing and property management, real estate valuation, land acquisition, and sales. The firm also offers B2B and B2C supply chain management services. AXI IMMO’s greatest advantage is combining international business standards with deep local market knowledge.

AXI IMMO has received numerous awards, including Best Local Agency of the Year in 2012–2019 and 2021 in the CiJ Awards and Best Team in the Warehouse Sector in 2016–2017. In 2019 and 2023, the firm was the winner in the Local Agency category, and in 2024, it was named Advisor of the Year at the CEE Investment Awards. AXI IMMO was named Local Agent of the Year in 2023 and 2024 in the CEE region at the CEEQA awards. The firm’s most recent achievement is the title of Advisor of the Year in the Prime Property Prize 2024.