Record breaking take up in Warsaw Office Market

The office market in Warsaw is clearly speeding up

Warszawa, 1st February 2012 – According to the latest research by CBRE, international real estate consultancy firm, total office take-up for Warsaw in 2011 reached a record level of 573,000 sq m. This is the best result in Warsaw ever achieved on an annual basis.

The office market in Warsaw is clearly speeding up - 226,000 sq m was leased in the City Centre and 347,000 sq m in Non-Central locations.

The demand for office space is growing, while vacancy rates remain at a relatively low level of circa 6.7%. However, it needs to be pointed out that the largest, build-to-suit lease transaction by TPSA (43,700 sq m) was officially registered last year along with the start of the construction.

Mokotow was the most popular area chosen by office tenants (170,000 sq m leased in 2011), followed by City Centre with nearly 150,000 sq m of newly occupied space.

Total modern office stock in the end of 2011 amounted to approx. 3,600,000 sq m. Only 14 office buildings were completed last year, totalling 120,000 sq m. That was the lowest supply level recorded since 1998.

Pipeline stock for the next 6 months will still remain limited, but a number of bigger projects are planned for completion in mid-2012. These include the first phase of Business Garden and Senator. At the moment, there are around 530,000 sq m under construction with 38% pre-leased in total. The most popular Warsaw zones, in terms of both take-up and new planned developments, are City Centre Fringe, Mokotow district and Jerozolimskie area. CBRE predicts that around 300,000 sq will be completed this year in Warsaw, 60% of which will be located in non-central areas.

In the 4Q 2011 the vacancy ratio diminished to the level of 6.7%. However, due to a growing number of tenants’ inquiries, the upward trend in terms of the demand for office space should be sustainable through the next year, which should cause vacancy rates to compress further.

The new deals had the biggest share in 2011, amounting to 46% of the take up. Pre-lets totalled 21% of the total leased space. The largest transaction of year 2011 were: pre-let of TP SA in Miasteczko Orange (43,700 sq m) registered along with the start of construction works, renegotiations of Ernst & Young (11,000 sq m) in Rondo 1 and the pre-let of Orlen Group in Senator (9,100 sq m).

Prime headline rents are slowly increasing in Warsaw, particularly in CBD (now at EUR 25 – 26 /sq m/mth). Rents in non-central areas have been stable at the level of EUR 15 -16.50 sq m/month. Still popular tenants’ incentives are now being successively reduced. Decreasing vacancy rates and growing demand should exert further upward pressure on rental levels in 2012, particularly in the central and established office locations.

A large number of office deals have been completed by CBRE Poland in the past few months, illustrating that the Warsaw office market is undoubtedly in an upward cycle.

‘A comparatively positive economic outlook is still driving demand for office space in Warsaw and we are particularly pleased with our recent deals, as it proves global corporate expansion plans are continuing despite European economic pessimism.’ – commented Colin Waddell, Managing Director of CBRE Poland.
‘In 2011 CBRE has observed a further revival on the real estate market, which began yet in 2010. Positive economic results have stimulated the property market to increase activity. The demand for office space has been improving every quarter and, basing on the current level of enquiries, we expect approximately a 10% yearly increase within the next two – three years, supported by general infrastructure improvement in the city.’ – he added.

For more information see HERE or download the Report as a PDF file.

PDF download