Warsaw Office Market Has Grown by a Quarter in Three Years

Warsaw Office Market Has Grown by a Quarter in Three Years

Warsaw market with its current office resources has joined the largest in Europe

In recent years, the increase in supply of office space in Warsaw has been extremely fast. Since the beginning of 2014, the capital gained one million sq m of offices and it does not seem like the developers are going to slow down. Only in 2016, over 20 buildings with more than 400 thousand sq m of offices were commissioned in Warsaw. Walter Herz experts agree that it is the best result in the history of the market, similar to a spectacular increase of office space recorded in 2000. Roughly as many offices as in Warsaw were commissioned last year in the largest Polish cities outside the capital.

For the first time on the Warsaw market two office towers were completed in one year- Q22 and Warsaw Spire, which are among the most architecturally interesting and most technologically advanced constructions. Such a large new supply, which we saw in 2016, did not cause a drastic increase in the vacancy rates. According to Walter Herz, the level of vacant office space in Warsaw by end of last year was only slightly higher than at the end of 2015.

New offices are not waiting for tenants

Experts point out that most of the recently constructed office buildings are almost entirely commercialized. – Especially the area of Wola which is now becoming the central business area, enjoys great interest of buyers. In the center and its outskirts, where half of the completed offices were commissioned, rents have slightly been lowered. It led to an outflow of tenants from Poland's largest office zone in Służewiec. Currently, one third of vacant offices in Warsaw is located in Mokotów - inform Walter Herz consultants.

Experts estimate that 300 - 350 thousand sq m of office space will be commissioned this year on the Warsaw market - It will strengthen the privileged position in which tenants are now. Especially that another 700 thousand sq m of offices is under construction – say Walter Herz experts.

Development continues

Such buildings as Proximo II, Generation Park, EC Powiśle, Business Garden II, West Station II, Mennica Legacy Tower, The Warsaw Hub are under construction. Office complexes by Chmielna and Jana Pawła II Streets also under construction. They will include the tallest building in Poland - Varso Tower measuring 230 meters, topped with a 80-meter spire.

Last year, almost as many offices as constructed in Poland, was leased in Warsaw itself. Most space was leased by tenants in central locations. Among the investors dominated companies providing services, including those from BPO/SSC sector, which has recently strongly marked its presence in the capital. Warsaw has the largest number of centers providing modern business services in the country. Advanced processes and knowledge-based skills are being moved to the capital . With progress of the maturing process of the Warsaw office market, the chances to receive further flow of foreign investments are increasing.

Continuation of a winning streak

Walter Herz specialists hypothesize that this year may be as successful for Warsaw as the previous one. - The overall economic situation in the country and the world will be critical to the development of the situation on the office market. If a favorable investment climate remains, office segment will continue its development – claim the experts.

The key issue for maintaining the current demand for offices in Warsaw will be the activity of tenants from BSS and financial sector as well as IT industry. If the tenants keep their appetite, the rents should also remain stable. Their growth may be affected by raising the minimum wage and a possible increase in the fees for perpetual usufruct. However, it is worth noting that the lease of office space in Warsaw is still much cheaper than in Western Europe.

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Warsaw Office Market Has Grown by a Quarter in Three Years

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