CEE-6 OFFICE MARKET Q1 2025
The CEE-6 office markets demonstrated remarkable resilience in Q1 2025, with leasing activity exceeding expectations across most capitals despite ongoing workspace optimization trends. The severe contraction in development pipelines continued to create supply-constrained conditions, particularly benefiting prime assets in central locations. Flight-to-quality trends intensified as companies prioritized ESG-compliant, amenity-rich environments over pure cost considerations, while hybrid work models stabilized around 2-3 days of office presence, driving demand for collaborative spaces.
- Regional cities outpace capitals in leasing momentum, with Polish regional markets achieving 177,000 sq m (+27% year-on-year) compared to Warsaw's 160,450 sq m (+16% year-on-year), while Bratislava posted its strongest first quarter in a decade at 62,800 sq m, demonstrating the continued expansion of shared service centers and IT sector growth across secondary markets. Budapest recorded a stable performance, with gross take-up reaching 93,000 sq m and net take-up accounting for 55% of the total (+21% year-on-year).
- Development pipelines reach critically low levels, with Prague projecting only 24,600 sq m of completions for full-year 2025—representing just 20% of the ten-year average—while Warsaw's pipeline contracted from 750,000 sq m in early 2020 to 180,000 sqm currently, and Budapest's speculative development representing only 17% of total construction activity.
- Prime rental growth concentrates in supply-constrained markets, with Warsaw achieving €24.00-27.00/sq m in the city center and Bratislava surpassing €20.00/sq m for the first time since Q1 2024, while Prague's inner-city rents increased 10% to €21.00/sq m, reflecting the market's bifurcation between premium and secondary assets.
- Vacancy rates decline in core markets despite economic headwinds, with Warsaw's overall rate improving to 10.5% (city center at 7.4%), Prague tightening to 7.0%, and Bucharest reaching 13.6%—the lowest since Q2 2021—while regional markets face challenges with elevated availability in secondary locations.
- ESG compliance becomes essential for competitiveness, as tenants increasingly prioritize sustainability credentials and modern amenities, prompting landlords to consider major refurbishments of older buildings to remain viable in an increasingly quality-focused market environment, with premiums for ESG-compliant properties reaching 15-25% in some markets.
