Over one million square meters of office space has been leased this year

In most cities, there are more leased offices than those under construction

The demand for offices is still record high. During the first nine months of the year, over 1 million sq m of office space has been leased in the largest cities in Poland. According to Walter Herz analysts, only in the third quarter of the year in the main office centers in the country almost 470 thousand sq m of offices were commissioned, about a dozen per cent more than a year ago.

60 per cent of offices in the country is being leased in Warsaw

Warsaw, constituted for almost 60 per cent of demand registered from the beginning of the year to the end of September, with lease contracts for almost 600 thousand sq m of office space. It is only a dozen per cent less than the annual average recorded in recent years. The most popular among tenants in Warsaw is the central office area, Służewiec and office buildings in the proximity of Al. Jerozolimskie Street. On the biggest regional markets, in Cracow and Wrocław, approximately 130 thousand sq m of office space was leased during that period.

High demand for offices reported by foreign and domestic investors encourages developers to intensify their business activities. The number and magnitude of the currently launched projects is a confirmation of the rapid pace of development of the sector, that we have never encountered before. According to Walter Herz estimates, in Warsaw there are about 815 thousand sq m of office space, which is an absolute record in the entire history of the capital market. In the remaining major office centers in Poland, another 1 million square meters of offices is under construction.

Warsaw with fewer commissioned offices than the regional markets

According to Walter Herz specialists, during the first three quarters of the year in Warsaw, over 200 thousand sq m of space was commissioned, and by the end of this year, the construction of another 100 thousand sq m of offices might be completed. In total, in 2017 the capital market will receive a similar amount of new space, as on average in recent years.

A number of currently running spectacular Warsaw projects require a longer implementation period. Hence, most of space will be completed by 2019-2020. According to Walter Herz, the supply of office space in Warsaw now stands at 5.3 sq m, which constitutes slightly over a half of domestic resources.

In the first nine months of the year, over 340 thousand sq m offices was commissioned on the regional markets, outside Warsaw. According to Walter Herz, by the end of this year, the construction of over 180 thousand sq m of space will probably be completed.

Low vacancy rate

The rapid increase in supply does not, however, increase the vacancy rate. Temporary increase of vacant space, following the completion of large facilities is quickly eliminated. The vast majority of new offices are absorbed by the market before the investment is complete.

In recent months, a slight increase in the vacancy rate was registered only in Cracow and the Tri-City. In the rest of the cities, it remained stable or dropped. According to Walter Herz, the least vacant offices are in Łódź - 6.6 per cent, and the volume of vacant space in Warsaw has recently decreased and amounts to 12.8 per cent.

Rents for office space are stable. In recent quarters there have been only minor price adjustments, which is a result of good balance in the sector between demand and supply. In Warsaw, in the central area of the city headline rent rates range from 19-25 euro / sq m / month, and in the other office centers in the city the office space can be rented from 11 to 16 euro / sq m / month. Rents in Wrocław and Cracow range from 13.5 to 14.5 euro / sq m / month.

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Over one million square meters of office space has been leased this year

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