In Q4 2022, gross office take-up was close to 2019’s record performance, leasing strategies took account of flexible office space and of the rapidly growing flex market as interesting projects broke ground to tap again into the potential of existing locations. Meanwhile, development activity remained subdued amid persistently high construction and fit-out costs, as well as an upward pressure on rents. This is a snapshot of the Warsaw office market revealed by BNP Paribas Real Estate Poland in its quarterly report “At A Glance – Warsaw Office Market Q4 2022”.
Office supply and an almost record high take-up
The challenging new reality
The Warsaw market will face fairly limited office availability in the coming quarters, leading to an upward pressure on both headline and effective rents. The hybrid working model, which is being increasingly embraced across Poland, will also be an important factor. As a result, hybrid leases with traditional deals supplemented by co-working offices will gain attraction in response to tenants’ expectations.
comments Małgorzata Fibakiewicz, Head of Office Agency, BNP Paribas Real Estate Poland.
Short-term leases are today the best solution to the demand for office flexibility. Such offices proved very successful during the pandemic and are now competing hard for a fair share of the market. Tenants like and appreciate them for several reasons; such offices are in prime locations, provide space for those who want to work in-office and are a powerful tool in optimizing rising overheads.
adds Dorota Fabisiak.
Strong appetite for plots of land, but office construction is slowing
The competition for parcels of land is in full swing in Warsaw, especially in its central zones. Office developers are finding it increasingly difficult to compete not only with residential, hotel or retail investors, but also with those specializing in logistics construction. They are also targeting plots occupied by older buildings that do not meet modern standards or are costly to maintain. Interestingly enough, office developers are now more willing to revise their plans and consider other formats such as PRS or mixed-use projects.
says Klaudia Okoń, Consultant, Business Intelligence HUB and Consultancy.
The growth in asking rents has been modest so far, but growing utility costs are feeding through to service charges which surged by around 20-30% over the past year.
says Dorota Fabisiak.