Report

Office Warsaw under construction

13 June 2017

The Warsaw office market has grown in the first quarter of 2017 by more than 83 000 sqm of modern office space, thus reaching a level of 5.26 million sqm. Experts at BNP Paribas Real Estate Poland estimate that by 2020 Warsaw will see the delivery of further 890 000 sqm of office space currently at various stages of completion. The record level of supply and the market’s maturity mean that tenants will be making extremely informed decisions in respect of selection of new office locations.

More vacant office space

Authors of the “At a Glance Q1 2017 - Office Market Warsaw” analysis anticipate that at the end of the year the vacancy rate may increase by 1-2 p.p. as compared to the level sustained on the market over the past several months, i.e. 14-15%. Additionally, the vacancy rate is affected by the location and age of the office buildings. Properties located in and around Służewiec Przemysłowy have an above-average vacancy rate, where the result for the first three months of 2017 oscillated between 17 and 19%. In turn, properties located mainly in the north and east of the capital’s centre record the lowest vacancy rate. As far as the age of the office buildings is concerned, those delivered to the market after 2010 are the most popular amongst tenants. On average, as much as 90% of space within this group is leased.

Office buildings prefer Wola

According to BNP Paribas Real Estate Poland estimates, more than 60% out of 890 000 sqm of office space currently under construction is located mainly within the boundaries of Wola and Śródmieście. Experts are of the opinion that out of all of Warsaw’s districts it will be Wola indeed that will gain the position of the leader of the office market over the coming years. This is supported by the number of pipeline projects that will be available on the market after 2020. The lure that attracts investors, developers and consequently future tenants are the local zoning plans that clearly define the opportunities and functions as regards any property developments and the extremely convenient access to public transport. The potential resulting from the presence and extension of the second metro line is also of certain significance here.

The centre still valued

The average rent for one square meter of space in a top office building located in the centre of Warsaw is between 20 and 22 EUR. However, experts at BNP Paribas Real Estate highlight that over the coming quarters it will be the older office buildings located in the capital’s heart in particular that will be forced to function under conditions of rapidly increasing competitiveness. The average rent in the centre in the first three months of 2017 stood at approx. 16-18 EUR, which was 3-5% lower compared to last year. Average rent outside of the centre oscillated between 11-13 EUR. The rent to be paid per month for prime office space away from the centre was 14-15 EUR per 1 sqm.

The office space race – which is first and foremost beneficial to tenants – is in full swing now. All large tenants ready to make the decision to lease office space in excess of 2 000 sqm can count on a truly individually tailored offer with a diversified incentive package. Ultimately, the effective rent for this type of transactions can on average be as much as 20-30% lower than the asking rent

Anna Staniszewska, author of the analysis, Head of Research and Consultancy

Where you work is of definite importance

The office’s standard, location and any amenities available there increasingly often constitute a bargaining card played by organizations wishing to retain and attract new employees. Social and cultural changes, new working styles and ever greater expectations towards employers mean that tenants focus on factors others than just rent. Modern, environmentally friendly design for office space is particularly important for those sectors where it is the employees that choose their employers, e.g. IT and the finance industry.