Tuesday, 13 January 2026
The Polish office market is entering a phase of heightened financial and qualitative discipline. Decisions on new developments, refurbishments and leasing are increasingly driven by detailed analyses and strict financial calculations—a trend set to strengthen further in 2026.
New office supply remains at historically low levels, with the volume of projects under construction continuing to decline. High financing and construction costs, compounded by ESG requirements, are limiting the feasibility of new office investments. As a result, developers are cautious, and purely office-led projects are increasingly rare.
At the same time, tenants and investors are demanding hard data, including energy consumption, carbon footprint and indoor air quality. While EU regulations allow some flexibility in timelines and ambition, this environment favours economically sound projects over aspirational declarations.
In practice, prime city-centre land is increasingly developed as mixed-use rather than single-function office schemes. For occupiers, this means fewer office-only options in top locations and longer lead times for securing space. Going forward, only well-located, carefully planned projects with credible leasing strategies are likely to reach the market. Although the shortage of high-quality space—particularly in Warsaw—may stimulate future development, any recovery in supply is expected to be gradual.
Office buildings are also increasingly losing out to residential development. With current yields, relatively low office rents and limited investor demand, offices struggle to compete with housing projects, which offer more attractive risk-return profiles. As a result, developers are redirecting capital toward residential schemes, while older office stock is more often converted or demolished rather than refurbished.
In many cases, upgrading outdated, energy-intensive office buildings in secondary locations is economically unjustifiable. Investments in façades or technical systems rarely translate into higher rents or stronger demand. Pragmatism is prevailing, and repositioning or selling assets is often a more rational choice than attempting cosmetic ESG improvements.
This trend is gradually reducing office stock in major cities, most notably Warsaw. Redevelopment projects are pursued only where clear financial benefits exist, such as lower operating costs and stable rental income. In this context, hybrid and mixed-use schemes are gaining a clear competitive advantage.
Tenant demand remains strongest for modern offices in prime locations, where rents are stable and, in some cases, edging upwards. Availability in other segments continues to shrink, making it increasingly difficult to secure not only large floor plates but also medium-sized units. As a result, tenants are initiating lease negotiations earlier, typically 12 to 18 months before lease expiry.
Companies are increasingly weighing the trade-off between premium locations and refurbished buildings offering acceptable standards at lower cost. The focus is on achieving the right business balance over a five- to seven-year horizon, with lease negotiations extending beyond headline rent to include fit-out contributions, rent structures and flexibility in leased area.
Flexible office space is becoming an integral part of leasing strategies. Across Poland’s seven largest cities, flex stock totals around 420,000 sq m, with market penetration in Warsaw and Cracow still at only about 4%, compared with roughly 20% in Western Europe. This gap highlights significant growth potential.
Flex offices are increasingly used for market entry, project work and daily operations. In parallel, many organisations are reinforcing return-to-office policies. After years of hybrid working, offices are again seen as critical to collaboration, culture and relationship-building, increasing the importance of well-designed, functional space.
In 2026, competitive advantage will favour tenants who remain agile—making faster decisions, adopting flexible leasing structures and adjusting strategies in response to changing market conditions.
Author: Mateusz Strzelecki, Partner / Head of Tenant Representation at Walter Herz
