Officials in modern office buildings

- Public institutions have recently shown a noticeably greater interest in leasing space in modern office buildings, both in Warsaw and in the largest cities in Poland. Changing the headquarters is a necessity for many offices, because the condition of the buildings in which they are located does not meet today's requirements and standards. They often require major renovations. The benefits of relocation of such entities to new locations, both newly built and older buildings, but meeting certain parameters may suggest that the state sector will soon become a major player on the office market - says Bartłomiej Zagrodnik, Managing Partner at Walter Herz.

According to Walter Herz data, public institutions in Warsaw rent on average approximately 60 thousand sq m, of modern office space per year. Bartłomiej Zagrodnik claims that the potential of this group of tenants, however, is much greater. - Demand for offices in new buildings comes from government institutions, local government units, central and local offices, as well as European institutions. We have recently brokered the lease of several thousand sq m. of office space by state-owned companies.

- This group of tenants needs comprehensive consulting and support in the field of leasing, which is why we decided to organize a training at Walter Herz’s Tenant Academy targeted at public institutions that will take place in Warsaw this Wednesday - adds Bartłomiej Zagrodnik.

Endless possibilities of contract optimization

Expert points out that the field for optimization in the case of state administration units is very large, because the contracts used by state offices usually include many non-market provisions and costs. - This also applies to functional arrangement of occupied space, equipment and technological solutions. Administration offices are usually not effective in terms of functionality of space and its adaptation to the real needs of the team of employees. They also fail to provide comfort at work due to the lack of adequate ventilation or lighting, division or administrative and technical facilities – admits Bartłomiej Zagrodnik.

- In addition to improving standard of the office, relocation of the headquarters can bring state offices reduction of costs associated with maintaining space - emphasizes Bartłomiej Zagrodnik. - The degree of savings depends on many factors and specific expectations of the entity. Despite the relatively high level of rental rates in modern buildings, the move may mean a reduction in the total rental cost due to more efficient use of occupied space, lower maintenance fees and no additional fees related to building maintenance. New office complexes also provide extensive service and greater security in terms of access to facilities and technical infrastructure. An important aspect is also the use of existing arrangement in several-year old buildings - explains Bartłomiej Zagrodnik.

Requirements of state institutions

It must be admitted that tenants from the public sector have quite specific requirements for office space. They usually focus on space that gives the possibility of division into offices and often expect comprehensive arrangement and finishing. The amount of monthly rent must be strictly defined and budgeted. Signed contracts rarely include provisions related to securing lease contracts, despite the fact that it is a standard on the commercial real estate market. However, state institutions are desirable tenants whose status guarantees lease stability, interest in large space and long-term contracts, and often also pre-emptive right to purchasing buildings.

Public sector has been present on the commercial office market for only a few years. Due to the location of most state administration units, institutional tenants conclude most contracts in Warsaw. Agency for Restructuring and Modernization of Agriculture was the first to lease commercial space - 16 thousand sq m. in Warsaw Poleczki Business Park complex in 2010. At that time, Public Procurement Office also rented space at Adgar Plaza.

Contracts for large spaces

Walter Herz data shows that in 2012, public institutions contracted almost 70 thousand sq m. of commercial office space. 2014 was even more fruitful, when state-owned companies generated a dozen or so percent of office demand on the Warsaw market. One of the largest transactions was the contract of Drug Registration Office for 13 thousand sq m. of space in Adgar Park West. At that time, significant contracts were also signed by Chief Inspectorate of Road Transport, Civil Aviation Office and Agricultural Property Agency.

European Border and Coast Guard Agency Frontex leased 14.6 thousand sq m. at Warsaw Spire, whereas 6.2 thousand sq m. of space in the same complex was leased by Centre for EU Transport Projects. One of the largest lease contracts signed in 2015 by a state entity, was the agreement of PZU Group for lease of 17,500 sq m. of space in Konstruktorska Business Center building.

In 2015, the headquarters of Poczta Polska (Polish Post) group also changed their registered office, leasing a total of 18 thousand sq m. in Domaniewska Office HUB, whereas the Ministry of Foreign Affairs moved to Foksal City building. Polskie Sieci Elektroenergetyczne leased an office of 7.1 thousand sq m. at Delta Eurocentrum Office Complex at Aleje Jerozolimskie street in Warsaw, and Office of Electronic Communications moved to the office building at Kasprzaka Street.

More and more state offices in new office buildings

Significant contracts signed in the last five years also included the agreement of Agency for Restructuring and Modernization of Agriculture, which extended the lease of 17.5 thousand square sq m. in Poleczki Park complex, PKP leasing 17 thousand sq m. of offices at West Station, and a contract for 14.8 thousand sq m. signed by Polish Financial Supervision Authority in Piękna 2.0 office building. In addition, PKP Cargo moved its headquarters, and leased 8 thousand sq m. of space in Katowice A4 Business Park.

Institutional tenants who have chosen modern office buildings also include the Agricultural Market Agency, which took 10 thousand sq m. in Karolkowa Business Park, Gaz-System, which has 9.2 thousand sq m. in the Cristal Park complex, Office of Electronic Communications, which took 8.1 thousand sq m. in G9 building and Minicipal Transport Authority, which in 2017 extended the lease agreement for their headquarters in JM Tower measuring 7.3 thousand sq m.

In 2018, Fundacja Polskiego Funduszu Rozwoju in Warsaw's Cedet, leased 10.3 thousand sq m. And in July this year, Bank Gospodarstwa Krajowego rented 12.4 thousand sq m. in Varso Place complex located in the vicinity of Warsaw Central Station.

About Walter Herz

Walter Herz company is a leading Polish entity which has been operating in the commercial and hotel real estate sector across the country. For over seven years, the company has been providing comprehensive, specialized investment consulting services. It provides full service to companies and institutions related to the real estate market. Walter Herz experts assist clients in finding and leasing space, commercialization of investments, and project management and administration.

In addition to its headquarters in Warsaw, the company has branches in Cracow and Gdansk. The company has established the first Tenant Academy in the country, offering free of charge stationary trainings in Warsaw and other cities for office space tenants across Poland. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice. Walter Herz company is affiliated with organizations and associations supporting the development of BPO/SSC sector in Poland

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Officials in modern office buildings

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