Office leasing in Poland: Market dynamics and evolving tenant expectations

Over the past year, tenant behaviour in Poland’s office market has continued to evolve, shaped by a mix of economic, operational, and regulatory influences. Key factors such as ESG requirements, longer lease commitments, and increasing demand for flexibility are now central to leasing decisions.

Changing Priorities Among Tenants
Environmental, Social, and Governance (ESG) considerations are playing an increasingly prominent role in office selection. Companies are placing more emphasis on a building’s sustainability credentials and are beginning to expect ESG-related clauses to be included in lease agreements from the outset of negotiations.

At the same time, the rising costs of office fit-outs have led to a noticeable shift in lease durations. Seven-year contracts are becoming standard in new developments, while leases in existing buildings typically run for five years or more. Short-term agreements, such as three-year leases, are now far less common.

For tenants requiring greater flexibility, particularly smaller businesses, landlords are responding with shorter-term leasing options. These often involve standardised, ready-to-occupy spaces available for one or two years, aimed at organisations that do not require customised office fit-outs.

Coworking is also seeing continued interest. Both independent providers and property owners are expanding their offerings, making flexible office arrangements more accessible. This reflects the wider move toward adaptability in workplace strategy and leasing structures.

Pre-let Activity Likely to Increase
With a limited number of speculative office developments in the pipeline, pre-let agreements may become a key avenue for tenants seeking high-quality, well-located space. Over the next two to three years, more organisations are expected to secure space through pre-let deals to ensure their specific requirements can be met.

The limited availability of new supply may also impact existing lease terms. Tenants could face added pressure when negotiating renewals, especially if they aim to maintain favourable conditions amid reduced options.

Market Balance Shifting Toward Landlords
For a prolonged period, office tenants in Poland benefitted from strong negotiating power. However, the balance has started to shift. The current supply gap is putting upward pressure on rental rates, and landlords are now in a stronger position than in previous years. While this shift reflects a typical market cycle, it presents new considerations for tenants.

Larger organisations are increasingly initiating negotiations well ahead of lease expiry—sometimes two to three years in advance—to secure suitable space. In contrast, smaller firms may gain a competitive edge by simplifying their internal decision-making, enabling them to respond quickly when opportunities arise. Recent market trends suggest that delays in the leasing process can lead to missed opportunities, making speed and preparedness more important than before.

Complexity Around ESG Compliance
While tenants today are generally more knowledgeable about the leasing process, the growing emphasis on ESG has introduced new challenges. Companies now require more specialised guidance in assessing buildings against ESG standards—a demand that was almost non-existent just a few years ago.

As a result, lease negotiations often involve input from multiple specialists, including sustainability consultants, legal advisers, and facility planners. This complexity is contributing to longer decision-making timelines and requires a more coordinated approach among stakeholders.

In summary, Poland’s office leasing market is adapting to changing tenant expectations and evolving conditions in supply and demand. ESG criteria, longer lease terms, and flexible options are now key factors in the decision-making process, while landlords are gradually regaining negotiating strength. As the market continues to shift, early planning and informed decision-making will be essential for tenants looking to secure the right space on favourable terms.

By Robert Pastuszka, Director, Office Agency

Renovation over demolition: ZEITGEIST focuses on sustainable urban development

In 2024, ZEITGEIST Asset Management completed several renovation projects in Central Europe, continuing its focus on the adaptive reuse of existing buildings rather than demolition and new construction. The developer finalised three building refurbishments in central Warsaw and completed the restoration of the historic Dunaj Palace in Prague’s UNESCO heritage zone.

The company’s approach reflects a growing trend in urban development: maintaining the architectural integrity of buildings while adapting them for modern use. By renovating rather than demolishing, developers can reduce environmental impact, preserve historical character, and contribute to more sustainable city planning.

According to Peter Noack, co-founder and managing director at ZEITGEIST Asset Management, modern renovation techniques allow old structures to meet current quality standards while maintaining their original design. “These buildings not only retain their atmosphere, but also contribute to more coherent and attractive city spaces,” he said.

In Warsaw, ZEITGEIST completed three major projects in 2024. The first, a 1960s office building in the Solec district, was transformed into a student residence. Another project involved the renovation of a historic tenement house in Old Praga, and the third was the refurbishment of a former shopping centre on Św. Barbary Street, near the Office of Telecommunications and Telegraphy on Nowogrodzka.

Tomasz Dąbrowski, Managing Director of ZEITGEIST in Poland, noted that adapting historic buildings for residential use supports urban goals such as the “15-minute city” concept. “Shorter travel distances reduce traffic and improve quality of life by allowing residents to spend more time with family or in the community,” he said.

ZEITGEIST reports strong demand for its renovated properties. In Warsaw, most of the 130 apartments at Wrzesińska Street have already been rented, while the Solec student residence has been fully occupied since opening.

Much of Warsaw’s architectural heritage is modernist, particularly from the post-war period. Many of these buildings suffered during poor-quality restorations in the 1980s and 1990s. Recent projects aim to reverse that damage and recover original design elements. For example, the renovation of the student residence at Solec 22 preserved the building’s original facade and staircase, with architectural features typical of 1960s modernism, including large windows and open ground floors.

At Św. Barbary 6/8, ZEITGEIST chose to highlight modest architectural details rather than replace them. The renovation focused on restoring metalwork, including the original entrance gate and courtyard-facing galleries. The building’s original light pink colour was also reinstated, along with terrazzo facade elements characteristic of the period.

In Old Praga, ZEITGEIST restored a tenement at Wrzesińska 2 that had fallen into disrepair. Originally built in 1863, the building later became the seat of a Jewish school after World War II. Renovation efforts included the preservation of original woodwork, mezzanine structures, and the historic entry gate.

The company follows a similar strategy in the Czech Republic. Its flagship revitalisation project, Palác Dunaj in Prague, is a notable example. Originally designed by architect Adolf Foehr, the constructivist building has been restored and now hosts the offices of the European Commission and the European Parliament, among others.

ZEITGEIST is currently managing around 60 revitalisation projects across Poland and the Czech Republic. According to Dąbrowski, the goal is to give historical buildings a new function while preserving their past. “Through restoration, we help people connect with the history of their city while meeting contemporary needs,” he said.

Poland’s unemployment rate holds steady at 5.4% in February 2025

Poland’s unemployment rate remained unchanged at 5.4% in February 2025, matching both the previous month’s figure and market expectations, according to the latest data released by the Ministry of Family, Labour and Social Policy.

The number of registered unemployed rose slightly by 9,000 compared to January, reaching a total of 846,600 jobseekers. Despite the month-on-month increase in registered unemployment, the overall rate has held steady, indicating a broadly stable labour market.

Year-on-year, the unemployment rate also remained unchanged. In February 2024, the jobless rate stood at the same level of 5.4%, reflecting consistency in labour market conditions over the past 12 months.

Analysts note that the slight uptick in the number of unemployed individuals is typical for the winter months, when seasonal employment opportunities in sectors such as construction, tourism, and agriculture are limited. They also highlight that the current rate continues to reflect a relatively strong labour market by historical standards, supported by steady economic activity and ongoing demand in several industries.

The government maintains that efforts to support employment through active labour market policies and training initiatives are helping to mitigate any significant fluctuations in joblessness. Economists will be closely watching labour market trends in the coming months as seasonal hiring resumes and broader economic conditions evolve.

Many in Sweden still work from home, though frequency Is slowly declining

Working from home remains a significant feature of employment life in Sweden, with levels still far above pre-pandemic norms, according to new data from Statistics Sweden’s Labour Force Surveys (LFS). The report reveals that while the share of people working from home has slightly declined since the peak of the pandemic, it remains a core part of the work routine for many, especially among permanent employees aged 20–64.

In 2024, around 46 percent of employed Swedes in this age group reported working from home to some extent—a dramatic rise from 2008, when the figure stood at just 20 percent. The most substantial growth has occurred among those who work remotely at least half of their working days. That share rose from just 6 percent before the pandemic to about 13 percent in 2024. While this figure is slightly down—by less than one percentage point—from 2023, the trend remains remarkably high compared to pre-pandemic patterns.

“The share of people who often work from home has decreased slightly but remains at a high level,” said Stefan Andersson, a statistician at Statistics Sweden. “We also see that those who work from home tend to log more hours overall.”

Remote work is particularly common among permanent employees aged 30–54. For this group, the share working from home at least half of the time increased from around 4–5 percent in 2019 to 14 percent for both men and women in 2024.

Education and sector also play a significant role in who works from home. Employees with post-secondary education, especially those in the private service sector or the state sector, are far more likely to work remotely. In these groups, the share working from home at least half the time has roughly doubled since 2019—from 10 to 22 percent in the private sector and from 12 to 21 percent in the state sector. In contrast, municipal sector workers have seen a decrease in remote work, dropping from 7 to 5 percent—likely due to the nature of roles that require physical presence.

Geographically, working from home is most common in Sweden’s metropolitan areas, where just over 15 percent of workers regularly work remotely. In urban and rural areas, the figure stands closer to 10 percent. Before the pandemic, remote work levels were more evenly spread across regions, but the shift toward remote work has since been concentrated in larger cities.

The report also examined how remote work affects the number of hours worked. Overall, individuals who work from home report slightly higher average weekly working hours than those who do not, a pattern consistent across most sectors. The largest gap is seen in the municipal and county council sectors, where remote workers logged nearly three more hours per week on average. Interestingly, in the IT sector—where remote work is most widespread—employees who work from home reported working about one hour less than their on-site counterparts.

Using a regression model, Statistics Sweden found a positive link between remote work and longer working hours, particularly among younger and older workers, individuals without post-secondary education, and those living in rural areas. In professions such as teaching and management, remote work is associated with working two to four more hours per week. However, this trend reverses in some high-tech fields like IT, where home-based work is associated with slightly fewer hours.

While remote work habits are evolving, the overall findings suggest that working from home is here to stay for a large segment of the Swedish workforce, albeit with variations across age, profession, education, and location.

Source: SCB
Data: Labour Force Survey

German residential property prices rise 1.9% in Q4 2024 year-on-year

Residential property prices in Germany increased by 1.9% in the fourth quarter of 2024 compared to the same period in the previous year, according to the latest data released by the Federal Statistical Office (Destatis). The modest rise signals a stabilisation of the housing market after months of price corrections driven by higher interest rates and cautious consumer sentiment.

The year-on-year increase marks a shift in market dynamics, following several quarters of stagnation or mild decline. While inflation and interest rate hikes had put downward pressure on prices throughout 2023, the latest data suggests a return of confidence among buyers and investors—particularly in urban areas and regions with sustained housing demand.

On a quarter-on-quarter basis, prices also showed slight upward momentum, driven by renewed activity in both the new-build and existing property segments. Analysts attribute the turnaround to improving economic sentiment, stable employment levels, and the gradual easing of financing conditions, which have made mortgages more accessible.

The data indicates that demand has been particularly strong in metropolitan areas such as Berlin, Munich, and Hamburg, where population growth continues to outpace housing supply. However, price growth in rural regions and smaller cities remains more subdued, reflecting a continued divergence within the German housing market.

Experts also point to an increase in residential investment and a growing interest in energy-efficient buildings, as both developers and buyers respond to stricter EU sustainability regulations and rising utility costs. The trend is expected to influence future pricing and demand patterns across the country.

While the 1.9% annual rise is modest compared to pre-pandemic highs, it is seen as a positive sign of resilience in Germany’s residential real estate sector. The coming quarters will reveal whether the market is entering a sustained recovery phase or simply experiencing a temporary rebound after a period of correction.

Housing affordability in England and Wales improves in 2024, returning to pre-pandemic levels

The housing market in England and Wales saw a notable improvement in affordability in 2024, following a sharp decline during the COVID-19 pandemic years. According to data released by the Office for National Statistics (ONS), the average home in England cost 7.7 times the median full-time salary (£37,600), down from 8.4 in 2023. In Wales, the affordability ratio fell slightly to 5.9 times the average annual earnings of £34,300. This marks a return to affordability levels last seen before the pandemic-driven surge in house prices between 2020 and 2021.

Overall, 91% of local authorities (289 out of 318) in England and Wales experienced improved affordability in 2024, while only 9% saw conditions worsen. Despite the improvement, housing remains out of reach for many in some areas. Only 9% of local authorities recorded house prices below five times the average annual income—a threshold commonly used to define affordability. While this is the highest share since 2015, it remains significantly lower than in 1997, when 88% of areas were considered affordable.

Blaenau Gwent in Wales was identified as the most affordable area in 2024, with a price-to-income ratio of 3.8. It was followed closely by Burnley and Blackpool, both with ratios of 3.9. On the other end of the spectrum, Kensington and Chelsea in London remained the least affordable local authority, with homes costing 27.1 times the average local income—seven times higher than the affordability threshold.

House price growth has largely stabilised over the past few years. Between 2021 and 2024, the median house price increased by just 1%, while average earnings grew by 20%. This shift in the income-to-price balance is a key factor behind the recent improvement in affordability. Between September 2023 and September 2024, median house prices in England and Wales fell by £7,500 (2.6%), while average earnings rose by £2,400 (5.6%).

The trend is especially evident in London, which has historically recorded the highest affordability ratios. The capital’s ratio peaked at 12.9 in 2021 but has since declined to 11.1 in 2024, bringing it closer to levels last seen in 2015. In contrast, affordability in Wales has remained more stable over the long term. After peaking at 6.6 in 2007, ratios in Wales have fluctuated only moderately, staying between 5.5 and 6.5 for much of the past 15 years.

Regional trends also varied between 2019 and 2024. The East Midlands recorded four of the ten largest increases in affordability ratios—indicating worsening conditions—while all of the ten most improved areas were located in London, suggesting the capital is regaining some balance between house prices and income.

This year’s report also highlights the long-term shifts in the housing market since records began in 1997. In England, affordability ratios doubled from 1997 to 2007, then remained relatively stable until 2013 before gradually rising again through to 2018. The pandemic years brought a sudden spike in prices, but with three consecutive years of declining ratios, 2024 sees affordability largely returning to its pre-pandemic trajectory.

The ONS analysis uses workplace-based earnings and house sale prices from the 12 months leading up to September 2024 to calculate affordability ratios. The data forms part of broader efforts to inform housing policy and the updated standard method for assessing local housing need.

While affordability has improved in much of the UK, the report cautions that the figures are not mix-adjusted, meaning they do not account for changes in the types of homes sold. As such, part of the observed improvement may reflect changes in the market composition rather than underlying shifts in real prices. Nonetheless, the overall trend suggests a modest easing of pressure on homebuyers across most regions.

Source: ONS

Twarda 16A in Warsaw sold in landmark real estate deal

The prominent office and retail property at Twarda 16A in Warsaw has officially changed hands in one of the capital’s most noteworthy real estate transactions of the year. The sale marks a significant moment for the Warsaw property market, reflecting continued investor interest in prime assets in central locations.

Located in the heart of Warsaw’s Śródmieście district, just steps from the city’s main business and cultural hubs, Twarda 16A has long been regarded as a desirable address. The building combines office space with ground-floor retail units and boasts excellent accessibility thanks to its proximity to major public transport lines, including the nearby Rondo ONZ metro station.

Although the identity of the buyer has not yet been publicly disclosed, sources close to the transaction confirm that the new owner is an institutional investor with an established presence in Central and Eastern Europe. The acquisition is understood to be a strategic addition to a growing portfolio of urban commercial properties.

The seller, a private investment group, had held the property for several years, during which time it maintained a high occupancy rate and secured several long-term tenants. The sale follows a broader trend in Warsaw’s commercial real estate market, where centrally located, income-generating assets continue to attract strong interest from both domestic and international buyers.

Real estate analysts view the transaction as a positive signal for Warsaw’s property sector, which has remained resilient amid economic fluctuations. “This deal highlights sustained demand for well-positioned office and mixed-use properties in the city centre,” said one local expert. “Despite evolving workplace trends, central locations with strong infrastructure and tenant appeal remain highly liquid.”

Further details of the transaction, including the purchase price and the buyer’s future plans for the property, are expected to be announced in the coming weeks.

Twarda 16A continues to serve as a symbol of Warsaw’s dynamic real estate market, blending functionality, location, and long-term value.

Blue City welcomes four new tenants in March, expanding retail and service offer

Warsaw’s Blue City Shopping Centre in the Ochota district has welcomed four new tenants this March, adding a total of 400 square metres of retail and service space. The latest additions include a mix of well-known chain stores and local entrepreneurs, further strengthening Blue City’s diverse offering and its appeal to a wide customer base.

Among the newcomers is NANU-NANA, a German decoration and gift shop chain known for its trendy home accessories and creative gift ideas. The new store, spanning 150 square metres, is the brand’s third location in Warsaw. “Opening another store in the capital is a direct response to high customer demand on social media,” said Martin Paprotny, CEO of NANU-NANA. “We believe Blue City is the ideal location and expect our new shop to quickly become a favorite shopping destination.”

Also joining Blue City is KODANO Optyk, a Polish optical chain offering prescription glasses, sunglasses, and contact lenses at competitive prices. The store also provides professional eye examinations on site. This is KODANO’s 13th location in Warsaw and covers approximately 90 square metres. “Our store in Blue City represents the newest design concept focused on customer comfort and a modern shopping experience,” said Karol Kożusznik, Member of the Board and Director of Expansion and Development at KODANO Optyk.

Blue City also saw the arrival of Dusza, a local women’s fashion boutique. With a 80-square-metre space, this is Dusza’s fourth outlet in Warsaw. The boutique offers a wide range of stylish and elegant clothing, from jackets and coats to sweaters and trousers, catering to women who value fashionable looks at accessible prices.

Adding to the shopping centre’s services, O!Fryzjer hair salon opened its doors with an 80-square-metre space dedicated to comprehensive hairdressing services for both women and men. The salon offers everything from cutting and coloring to styling and cryotherapy treatments – one of the few places in Warsaw to do so. Skilled barbers and stylists are on hand to ensure a premium grooming experience for all clients.

Anna Gut, Leasing Director at Blue City, expressed satisfaction with the latest additions. “Leasing activities are progressing as planned. The new tenants are a perfect fit for our customer base, bringing fresh fashion, design, and lifestyle options. This expansion not only enhances the shopping experience but also broadens the centre’s reach,” she said.

With around 200 tenants and a 97% occupancy rate, Blue City continues to solidify its position as one of Warsaw’s most vibrant retail destinations.

Czech Republic’s foreign debt rises to CZK 5.27 trillion, driven by business and bank borrowing

At the end of 2024, the Czech Republic’s foreign debt reached CZK 5.271 trillion, representing an increase of CZK 460.4 billion year-on-year and accounting for 65.8 percent of the country’s gross domestic product. According to preliminary data released by the Czech National Bank (CNB), foreign debt rose by CZK 92.9 billion in the final quarter of the year alone. Foreign debt refers to the total liabilities with fixed maturity held by domestic entities toward foreign creditors.

The year-on-year increase was primarily driven by the private sector, especially businesses and banks. According to Petr Dufek, chief economist at Creditas Bank, higher domestic interest rates motivated Czech companies to seek financing abroad. Meanwhile, banks attracted foreign investors and savers to deposit Czech crowns in local accounts.

Despite the sharp rise, Dufek views the current level of foreign debt as safe. He noted that it is adequately covered by the CNB’s foreign exchange reserves and that the structure of the debt remains stable, with long-term liabilities making up a slight majority.

Private sector obligations made up 77.2 percent of the total foreign debt. The remaining portion included public sector liabilities, such as government-guaranteed debt and commitments by state-controlled entities. In the fourth quarter of 2024, the banking sector (including the CNB) and other non-government sectors increased their foreign borrowing, while general government debt decreased.

The CNB reported that the increase in bank debt was largely due to growing demand from foreign investors for bank bonds. The banking sector accounted for 37.8 percent of total foreign debt, while other non-government sectors represented 46.3 percent. Much of the increase stemmed from long-term loans secured by Czech companies from foreign lenders, as well as a smaller contribution from foreign investors purchasing corporate bonds.

On the other hand, the foreign debt of the general government dropped by CZK 38.1 billion in the last quarter of the year, mostly due to foreign investors selling off Czech government bonds. By the end of 2024, the public sector’s share of total foreign debt stood at 15.9 percent.

In terms of financial instruments, the most common forms of foreign debt were deposits and intercompany loans, making up 52.1 percent of the total. Looking at maturity, debt with original terms longer than one year represented 50.3 percent of all foreign liabilities.

Source: CNB

Czech real estate market rebounds in 2024 with strong demand for new housing

The Czech real estate market stabilized in 2024 after several years of uncertainty and has started to show signs of gradual growth, according to the Trend Report 2025 published by the Association for the Development of the Real Estate Market (ARTN). The report, obtained by the Czech News Agency, highlights rising demand for new apartments, increasing property prices in Prague, and varying levels of activity across different real estate segments.

One of the key factors contributing to the positive market shift was the stabilization of inflation and a decline in interest rates. These macroeconomic improvements sparked renewed interest in rental housing, as well as industrial and logistics properties, which the report describes as resilient investments during periods of economic fluctuation. In total, real estate investment volume in 2024 reached €1.8 billion (approximately CZK 45 billion), marking a 23 percent year-on-year increase. Notably, investment activity in the final quarter of 2024 more than tripled compared to the same period the year before.

Sales of new apartments saw a significant jump. In Prague, 7,200 new units were sold last year—an 80 percent increase year-on-year. Despite the strong demand, limited supply caused prices to rise, with the average price per square meter reaching CZK 156,828, a 10 percent increase from 2023. Similar growth trends were seen in the regions outside Prague, where 8,256 new apartments were sold, up 60 percent from the previous year. In the fourth quarter alone, 2,207 units were sold in the regions, reflecting a 45 percent annual increase. The average price per square meter in regional markets climbed by 4 percent to CZK 101,738.

In the office market, new supply in Prague dropped significantly. Only 72,800 square meters of new office space were completed in 2024—26 percent less than in 2023 and well below the 10-year average of over 120,000 square meters. ARTN predicts an even lower figure for 2025, with just under 25,000 square meters expected to be completed—marking a record low for the capital. Key upcoming projects include PernerKa and the first phase of E-Factory in Prague 9, as well as the reconstructions of the NR7 and VN62 office buildings in the city center.

The retail sector benefited from stabilizing consumer spending, which grew year-on-year. Most of the new retail space was developed in retail parks, while investment in the sector is increasingly focused on modernization rather than new construction. A notable trend is the expansion of Czech e-commerce businesses into foreign markets, including Western Europe and beyond.

The industrial real estate segment saw a decline in activity. Only 517,900 square meters of industrial space were completed in 2024, representing a 45 percent decrease from the previous year. Demand was the lowest since 2018 and fell 20 percent below the five-year average. However, ARTN notes that development activity is expected to pick up again, with roughly 5.9 million square meters of new industrial space currently planned for construction in the coming years.

The report concludes that, while the real estate market is still navigating the aftermath of recent economic shifts, the foundations for renewed growth are being laid across several key sectors.

Sources: ARTN, CSO and CTK

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