Occupier Economics: Office Market in Warsaw in 2017

Warsaw Office report

Last year’s office take-up hit more than triple the new supply in Warsaw, says “Occupier Economics: Office Market in Warsaw in 2017”, a report produced by global tenant-only real estate advisory firm Cresa. 

“We are seeing a paucity of prime offices in downtown Warsaw. Due to rising demand, some landlords readjust their offer to market conditions during negotiations, including incentives in lease packages. Large-scale developments planned for 2020 will fill the supply gap,” says Bartek Włodarski, Partner, Head of the Office Department, Corporate Solutions at Cresa Poland.

At year-end 2017, Warsaw’s total office stock stood at 5.28 million sqm. Last year’s supply totalled 275,400 sqm following the completions of Business Garden II (54,800 sqm), West Station II (35,000 sqm) and D48 (23,400 sqm) and other projects. There is currently more than 750,000 sqm of office space under construction. The largest scheme in the pipeline is Varso, the tallest building in Poland and the European Union, which is scheduled to provide nearly 140,000 sqm once completed and delivered to the market in 2020.

Take-up hit 832,000 sqm in 2017, up by 10% on 2016. Key lease transactions on the Warsaw office market included Citi Service Center Poland’s (part of the Citi Group) 18,600 sqm lease at Generation Park X, Millennium Bank’s 18,300 sqm lease at Harmony Office Centre A and JP Morgan’s 15,550 sqm lease at Atrium Park. Asking rents vary by district, standing at EUR 10.5-13.5/sqm/month in Służewiec, EUR 13-18/sqm/month in Nowa Wola and EUR 15-23/sqm/month in the city centre.

At the end of 2017, there was 615,700 sqm of vacant space, accounting for 11.7% of Warsaw’s total stock (a 2.5 p.p. decrease yoy). Last year’s absorption set a record high of 377,200 sqm of office space.

According to Cresa’s analysts, Warsaw will see lower supply levels in the next two years to be followed by a record-breaking volume of new office space forecasted for 2020. 

“The upcoming changes to International Financial Reporting Standards are likely to make long-term leases less attractive. As a result, some large tenants are beginning to consider real estate acquisition or construction of schemes for owner-occupation,” says Bolesław Kołodziejczyk, PhD, Head of Research & Advisory, Cresa Poland.

Download the report

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