Warsaw Offices Are Not Waiting for Tenants

Warsaw office market has seen great results for several years, but this year it has a chance to be the best period in the development of this sector in the city. The exceptional activity of investors brought in the first three quarters of the year a record number of almost 380 thousand sq m of new office space in several projects. Among the most frequently mentioned recently finished projects are two office towers - Warsaw Spire and Q22, which are among the highest buildings in Warsaw, as well as office buildings in Hala Koszyki. Walter Herz Experts estimate that 2016 is likely to end with the result of 450 thousand sq m of new supply in the office sector.

In the third quarter of the year only one investment was commissioned - West Station I by HB Reavis company, due to which the resources of the modern office space in Warsaw exceeded the level of 5 million square meters. According to Walter Herz experts, there are currently nearly 700 thousand sq m of offices under construction in the city. The consultants agree that developers are building a lot, but they are not willing to risk. Major projects are run in stages and the advanced construction work in projects begins only after the signing of strategic pre-let agreements.

Demand exceeds supply

Nevertheless, the demand for Warsaw offices is so large that despite the high level of new supply, the vacancy rate not only did not increase, but even slightly decreased in the third quarter of 2016. Since the beginning of the year to the end of September about 150 thousand sq m more office space was leased than commissioned in Warsaw. If such demand for offices continues, there is a chance that this year will exceed the average volume of lease in recent years, which according to Walter Herz analysis amounts to over 600 thousand sq m of space.

In recent months, offices located in the city center were the most popular. All the more so, because the base rents for prime space in Warsaw have recently been lowered. Their prices are currently between 21-23 euro / sq m / month.

The situation on the Warsaw market fosters moving. In conditions of fierce competition, the owners of the buildings offer more extensive package of incentives for tenants, which greatly reduces the effective rates. - Office parks on the outskirts of Warsaw compete with office buildings in Służewiec, which in turn compete for tenants with new office buildings constructed in the center and the district of Wola. It's a good time for renegotiating the terms of existing agreements or making decisions about relocation - say Walter Herz consultants. They admit that many companies are now looking for space in good value to money ratio. According to the company, one-third of the volume of the lease include extensions of the existing contracts.

Good time to change the office

Experts argue that tenants can save a lot if the negotiation process is carried out skillfully. They can get not only the savings from better lease terms, but also the budget for fitting out offices in more attractive building with more comfort.

Walter Herz analysts point out that Warsaw also attracts many new investors, who so far have not been interested in the Polish market. This is due to good economic performance of Poland and the increasing availability of high quality office space. Moreover, international companies notice the huge potential of human resources in our country. They note that recently, several global brands have decided to open offices, or expand their business in Warsaw. According to Walter Herz, the largest amount of office space in Warsaw is occupied by companies from the sector of new technologies, telecommunications, consulting and media.

According to investors announcements, in 2017 Warsaw will gain almost 350 thousand sq m of new offices. It is half of space, which is currently under construction. The largest investments in progress include, among others Sienna Towers, Business Garden III-VII, Mennica Legacy Tower, Spark and West Station II. Part of several year old office buildings is also being renovated or enriched with representative space in the common areas.

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Warsaw Offices Are Not Waiting for Tenants

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