State Treasury emerges as a key player in Poland’s office market

The involvement of state entities in Poland’s office sector is steadily growing, positioning the State Treasury as a significant force shaping the market. Over the coming years, administrative institutions and state-owned enterprises are expected to play an increasingly active role, not just as tenants but as investors, developers, and asset managers. This influence will drive modernization, acquisition, sale, and construction of office properties to meet public sector needs.

In Warsaw, where a supply gap is already evident, the heightened activity of public entities is poised to influence decisions regarding new office developments. Projects such as Drucianka Campus, Fort 7, and subsequent phases of The Park Warsaw are in the pipeline, showcasing the capital’s evolving landscape. Investors view this government involvement as a catalyst for unlocking resources and stimulating new projects.

Emilia Legierska, Transaction Director at Walter Herz, noted that the Polish office market remains highly resilient, driven by robust demand from the public sector. This demand, coupled with the growing emphasis on returning to on-site work, has brought leasing activity close to pre-pandemic levels. Large-scale lease agreements by government units and state-owned companies are expected to further boost transaction volumes this year.

Despite regional markets offering an ample supply of office spaces, Warsaw faces a scarcity of large, modern office areas. This shortage has driven an uptick in pre-lease agreements, which made up a significant portion of total lease volumes in the latter half of 2024. While regional markets have seen a halt in new office investments, Warsaw remains a focal point, with projects like The Bridge, Studio II, Office House, Skyliner II, UpperOne, Warta Tower, and Vena currently under development.

Strategic Investments by State Entities

Public entities have increasingly been consolidating and modernizing their administrative spaces, reflecting a more strategic approach to real estate management. Notable examples include the Greater Poland Regional Office of the National Health Fund (NFZ) relocating to a modern office in Poznań and the modernization of its facility at Chałubińskiego Street in Warsaw. Similarly, Bank Gospodarstwa Krajowego (BGK) extended its lease within the prestigious Varso Place complex in Warsaw.

Polish State Railways (PKP), in collaboration with HB Reavis, redeveloped the area around Warsaw West Station, while PKP’s Xcity Investment and Ghelamco are launching a new project near Warsaw Gdańsk Station. PKP’s decision to release land for business purposes is set to enhance Warsaw’s office market supply, with a 2.4-hectare plot near the station earmarked for a new business hub.

State-owned enterprises are also optimizing their portfolios. Bank Pekao S.A. has put its long-standing headquarters on Grzybowska Street in Warsaw up for sale, while the Institute of Environmental Protection plans to sell its office-laboratory building. Meanwhile, Polish Transmission System Operator (PSE) is constructing a 158,000-square-meter headquarters in Radom, expected to open early this year.

PZU, the state insurance company, has moved its operations to Skanska’s Generation Park Y in Warsaw and is planning to redevelop its former headquarters. The PZU Tower on Grzybowska Street is set for demolition, with plans for a modern 150-meter skyscraper to replace it.

Domestic Capital Gains Prominence

Polish capital has emerged as a growing force in commercial real estate investments. In 2024, domestic investors accounted for 10-15% of investment transactions in the office market during the first half of the year, double the share recorded in the previous year. This marked a departure from the historically low average of 2% prior to 2022.

Katarzyna Tencza, Transaction Director at Walter Herz, highlighted the resurgence of investment activity in Poland’s commercial real estate market, noting exponential growth in the office sector. Transaction volumes reached €1.6 billion in 2024, almost four times the figure from 2023.

The sale of the Warsaw Unit building for €280 million underscored the market’s strength, representing the largest office transaction not only in Poland but in Europe. Other significant transactions included the sale of the Nowy Rynek E office building in Poznań.

With anticipated interest rate cuts and attractive returns on the horizon, the office sector is set to draw further interest from investors, both in Warsaw and regional markets. These developments, coupled with the active role of state entities, signal a dynamic and transformative period for Poland’s office market.

Source: Walter Herz
Photo: Katarzyna Tencza, Transaction Director at Walter Herz