According to CBRE, the office market in Warsaw is clearly speeding up – 226,00 sq m was leased in the city centre and 347,000 sq m in other locations.
While demand for modern office space is on the increase, the vacancy ratio drops – it is currently at the level of 6.7% and is anticipated not to exceed 8% until the end of the year. The largest recorded transaction was the one by TP SA leasing 43,700 sq m for its purposes in a facility whose construction has only began.
Mokotów was the most popular district among tenants with 170,000 sq m leased in 2011. The second most popular location is the City Centre with 150,000 sq m of newly occupied office space.
The total volume of modern office space in Warsaw currently amounts to 3,600,000 sq m. Only 14 new buildings of the total space of 120,000 sq m were completed last year. It has been the lowest result since 1998. Currently, the city sees over 530,000 sq m of office space under construction, with 38% already leased.
A few large-space projects werescheduled for completion in mid-2012. These include Business Garden emerging at the junction of 1 sierpnia and Żwirki i Wigury streets as well as Senator located at the crossing of ul. Bielańska and Al. Solidarności. The most popular districts, both in terms of buildings under construction and recorded take-up, are City Centre fringe, Mokotów and Aleje Jerozolimskie. CBRE forecasts that approx. 300,000 sq m will be completed this year, with 60% in non-central locations.
New agreements accounted for 46% of all lease agreements signed last year. Pre-let agreements totalled 21%. The largest transaction was the mentioned lease of office space by TP SA in Miasteczko Orange (43,700 sq m). Other large transactions were agreement renegotiations of the Ernst & Young consultancy firm, concerning Rondo 1 building (11,000 sq m), and a pre-let agreement of Orlen Group for Senator (9,100 sq m).
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The initial lease rates for the best office space in the best locations are currently at the level of EUR 25 - 27 per sq m a month and present an increase trend. Monthly rates for offices in non-central areas stabilised at the level of EUR 15 - 16.50 per sq m. Promotional offers, various amenities and building owner’s participation in removals, especially in the best locations, are being gradually reduced, although still popular and convenient for tenants. A drop in the vacancy ratio and an increase in demand may have a direct impact on the growth of rent rates in the City Centre in late 2012.
In 2011, CBRE recorded further revival on the market of commercial real estate, beginning in late 2010. Positive economic results stimulated higher activity on the market. Demand for new offices was increasing on a quarter-to-quarter basis and, with the present number of enquiries for new space, we forecast an approximately 10% yearly increase in lease over the next 2-3 years. It will also be encouraged by improved city infrastructure in Warsaw”, said Colin Waddell, Managing Director of CBRE Poland.
