Warsaw offices in record demand
Office & mixed-use developmentdeputy editor
“The office market in Warsaw is maintaining its momentum. The demand for modern office space continues to grow thanks to new investors entering the market as well as the unceasing development of companies already operating in the city,” claims Tomasz Czuba, the regional director and head of the office agency at JLL in Warsaw.
“The main beneficiaries of occupier activity were the City Centre, Mokotów and the Central Business District. Furthermore, Wola continues to be popular among both developers and prospective tenants. The area has the biggest office investments currently under development and constitutes a popular relocation destination for companies from other parts of Warsaw,” he adds, in reference to the number of projects in the City Centre West-Wola district.
The largest leasing deals in the city in H1 include: Millennium Bank’s 18,300 sqm renewal in the Harmony Office Centre; City Service Center Poland’s pre-lease of 13,600 sqm in Generation Park X; Alior Bank’s renewal and expansion in Łopuszańska Business Park B (13,400 sqm) and AstraZeneca’s renewal and expansion in Postępu 14 (13,200 sqm).
The largest office buildings delivered to the market in H1 include: Business Garden 3–7 by Vastint (54,800 sqm), Ethos by Kulczyk Silverstein Properties (12,100 sqm), Neopark A by Yareal (10,600 sqm) and EQlibrium by Grupa Waryński (9,900 sqm).
“The high demand has triggered a high level of development activity. A total of 16 projects were delivered to market in H1 2017. This comes to 131,400 sqm of space, while app. 750,000 sqm is currently under construction across the city. We estimate that app. 155,000 sqm will be delivered to market by the end of this year. What is important is the fact that a significant part of volume in the pipeline is made up of several large-scale projects scheduled for completion in 2019/2020, when Varso, The Warsaw Hub and Mennica Legacy Tower, among others, will enter the Warsaw office market,”, comments Mateusz Polkowski, the head of research and consulting at JLL.
The vacancy rate in Warsaw fell slightly in H1 2017 and now stands at 13.9 pct (13.2 pct in central areas and 14.3 pct outside it). “We expect that the vacancy rate will remain on a slightly downward curve until the end of 2018 due to the high demand, the gradual absorption of available office, and the fact that the pipeline for the remainder of 2017 and 2018 is not that extensive,” adds Mateusz Polkowski.
Prime headline rents remained relatively stable in H1 2017, at EUR 20.5–23 per sqm per month in the CBD, while the rates for prime assets in the best non-central areas were around EUR 11–16. According to JLL, rents should remain stable until the end of 2018.
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