In its latest Market in Minutes report Savills highlights that take-up and development levels remain robust on the Warsaw Office Market with increasing activity outside the central zones including the South West, South East and particularly the West zone, which recorded a 140% year on year rise in leasing activity.
In its latest Market in Minutes report Savills highlights that take-up and development levels remain robust on the Warsaw Office Market with increasing activity outside the central zones including the South West, South East and particularly the West zone, which recorded a 140% year on year rise in leasing activity. The firm attributes this trend to tenants seeking to reduce costs and the construction of the second underground line to the West of the city centre.
According to the international real estate advisor’s data 333,900 sq m of office space was let in Warsaw inH113, representing a 12% rise year-on-year. The Upper South zone recorded the highest level of activity, accounting for 33% (109,200 sq m) of lettings, followed by 83,800 sq m in the South West. Gross take-up in the city centre totalled 77,400 sq m in this period, circa 11% more than in H113.
In terms of development, approximately 155,500 sq m of new supply came onto the market in the first half of 2013. This new supply comprised of nine office buildings only one of which, the 3,700 sq m Plac Bankowy 1, was located in the city centre. Four of these properties totalling 107,600 sq m were completed in the Upper South area including the two largest schemes completed in this period, namely the Konstruktorska Business Center (48,300 sq m) and Marynarska 12 (40,000 sq m). Savills research finds that total stock in the Upper South zone stands at more than 1.1 million sq m, representing 28% of Warsaw’s total modern office space. Going forward, a further 468,000 sq m is scheduled for delivery over the next 18 months, 75% of which in non-central zones including Orange’s new 40,700 sq m Warsaw headquarters in the South West sector and the 27,600 sq m Wola Centre located in the West zone, both in H213 .
Michal Stepien, senior research consultant at Savills Poland, comments: "We are seeing a healthy level of activity on Warsaw’s office market and expect that by year end total take-up will reach 600,000 sq m, almost in line with the 2012 result of circa 608,000 sq m, as the Polish capital remains a favoured destination for domestic and international tenants and investors. In terms of new supply, occupiers are increasingly looking outside the city centre to secure cheaper rents and developers are responding to this demand.”
Prime rents currently range between €22-€23 per sq m/month and €14-€14.75 per sq m/month in the non-central Mokotow district, representing a 5% decline over the last 12 months and Savills expects these to remain stable going forward.
At the half year point the firm notes that the average Warsaw vacancy rate stands at 10.5%, up from 7.4% year-on-year, whilst average vacancy across non-central zones stands at 10.8% (up from 7% year-on-year). With 1.1m sq m of new office stock due to be completed by the end of 2015 the average vacancy rate across Warsaw is expected to rise to 12% by the end of 2013 and remain stable at this level.
Tomasz Buras, head of office agency at Savills Poland, says: “With increased availability of office space on the Warsaw office market prime rents have decreased slightly and landlords are recognising the need to be flexible making it currently an occupier’s market. Now is a good time for tenants to relocate as they can expect lower rents and attractive packages of incentives offered by landlords, especially in buildings under development.”
For further information, please contact:
Tomasz Buras, Savills Poland Tel: +48 (0) 22 222 4020
Michal Stepien, Savills Poland Tel: +48 (0) 22 222 4039