No signs of slow-down

Occupier activity shows no sign of slowing down on the Warsaw office market after the first half of 2019 – the leasing volume in the second quarter of 2019 alone hit the highest quarterly level since records began. This record take-up was driven by several large office lettings in central locations, particularly in near the Daszyńskiego Roundabout.

Pre-leases make up a growing proportion of take-up due to the shrinking volume of office space available for immediate occupancy. They account for 68 pct of office projects to be delivered to the market in the second half of 2019 and 42 pct of those scheduled for completion in 2020. This is likely to push Warsaw’s vacancy rate down in the coming 18 months with effective rents coming under pressure.

The supply gap that began in 2018 will carry into 2020 despite the planned annual office supply in this period being above the five-year average. The falling availability of office space across Warsaw will benefit non-central locations such as Służewiec, which has the largest volume of readily available space of all the office zones in the capital city.

In the first half of 2019, investment activity totalled EUR 998.7 mln, up by EUR 630.5 mln on the same period of 2018. The largest transactions closed in the first six months of the year included West Station (Mapletree), Ethos (Credit Suisse) and Warsaw Trade Tower (Globalworth). Given the number of transactions pending such as the acquisition of Warsaw Spire by Immofinanz, the total investment volume is expected to continue to grow. Prime Warsaw office yields stand at 4.75 pct, with further yield compression expected, particularly in the case of office buildings in the centre of Warsaw.