Report: Flexible work places in Poland

COWORKING SPACE AND SERVICED OFFICES MAINTAIN
A STRONG GROWTH MOMENTUM

Flexible Workplaces in Poland, vol. 2 report highlights:

• Serviced offices and coworking spaces are on the rise in Poland
• Five core Polish markets provide 129,000 sq m of flexible office space in aggregate
• Warsaw is the country’s leader for flexible workplaces, but regional cities boast the strongest growth potential
• In 2017, London led the way in terms of flexible workplace leasing in Europe
• Flexible workplace providers are likely to benefit from the anticipated limited supply of traditional office space in Warsaw in 2018-2019

There are 174 locations offering flexible workplaces across Poland’s five core markets, says real estate advisory firm Savills in the second edition of its report Flexible Workplaces in Poland. Warsaw is strongly ahead of other cities with more than 94,000 sq m of flexible workplaces, of which 80% is available in modern office buildings. The remaining top four markets are Krakow (over 17,000 sq m), Poznań (9,300 sq m), Wrocław (6,200 sq m) and Łódź (2,200 sq m). At least 52,000 sq m of flexible workspace is expected to be added to the Polish market in upcoming years across locations that are currently in the pipeline. Warsaw still has more serviced offices than coworking spaces (approximately 10,000 sq m more), but this ratio is likely to reverse this year due to the growing trend of coworking providers leasing ever larger spaces.

“2017 undoubtedly belonged to the coworking segment that continues to expand unabated, radically changing the traditional office market. The flexible workplace market is growing at such a rapid pace that some commentators are beginning to recognise risks lying ahead. In Poland, however, there is still a place for new coworking providers and further expansion of those firmly established on the market. Some regional cities, in particular, represent a growth potential that has so far been untapped by this sector,” said Jarosław Pilch, Head of Office Tenant Representation at Savills.

Coworking spaces and serviced offices are used primarily by large corporations for short-term projects. Flexible lease terms with an option to lease even one workstation for just a couple of hours also attract start-ups. It is expected that public spending on policies driving innovation in Poland will reach EUR 50 billion in the next five years, a large part of which will go to support start-ups.

“According to the findings of a survey we conducted with a website operator mamstartup.pl, only 7% of the respondents indicated coworking space as their most frequent workplace. This figure is set to rise, but we should be aware that a coworking space dominated by start-ups is a stereotype that is rather far from reality. In addition, although the atmosphere of coworking spaces nurtures creativity, it is not suitable for all. Many businesses value privacy and a more traditional business atmosphere, and opt for enclosed spaces in serviced offices. On the other hand, fast-growing tenants from IT, fintech and software development sectors are beginning to see flexible workplaces in large buildings as a strong advantage that could enable them to secure additional space for potential expansion without having to sign up for such space for five years in advance,” comments Jarosław Pilch at Savills.

According to Savills data, leases signed by providers of serviced offices and coworking spaces in 2017 totalled 31,300 sq m. Last year’s newcomers to the Polish market included New Work Serviced Offices, Mindspace, Solution Space and Bobo Coworking. Recognising this new trend, many developers engage in cooperation with flexible workplace providers or set up subsidiaries to deliver such services.

In 2017, the flexible workplace sector accounted for nearly 4% of total office take-up in Warsaw, which represented an almost fourfold increase in the space of two years. This is still considerably less than in London or Berlin, but more than in Amsterdam, Madrid or Vienna. The UK’s capital saw the strongest activity of flexible office space providers in 2017 with 204,500 sq m of flexible office space transacted in the city’s two core zones (the City and the West End), accounting for 18% of all commercial office leases.

“The anticipated limited supply of office space in Warsaw in 2018–2019 and falling vacancy rates will drive demand for serviced offices and coworking spaces. In future, flexible workplaces are likely to be embraced even by corporate occupiers that today cannot even imagine themselves using them. I expect many large businesses to enter the Polish market by leasing such office space first. For some, such space is a response to the forthcoming entry into force of IFRS 16 and the need to disclose leases in excess of 12 months as balance sheet liabilities. On the other hand, operators who have not expanded into Poland yet are aware that now is the time to clinch deals as the market is likely to become saturated soon. Most of the planned new locations will open by 2020, which will be a moment of truth for the new phenomenon and will show whether or not the market is oversupplied with coworking spaces and serviced offices. We are clearly witnessing an emergence of a strong, alternative leasing market for large office spaces where there is no need to make long-term commitments for five years ahead as before,” says Jarosław Pilch at Savills, which produced the Flexible Workplaces in Poland report.

Glossary:

Serviced office – a form of a flexible office providing fully furnished and equipped office space with full administrative and maintenance support, rented for a short period.

Coworking space – a form of a flexible office designed to create an atmosphere that fosters cooperation between users, frequently coming from various sectors. Coworking space is actively managed to foster collaboration by organizing events and activities supporting mutual learning.

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