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Record-breaking take-up levels in WarsawOutside Warsaw, Kraków and Wrocław maintain their lead in terms of construction activity and take-up volumes, followed by Katowice and Tri-City
Warsaw, 23 January 2013 – Jones Lang LaSalle presents its office market report summarising Q4 2013 in Warsaw and other major Polish cities.
Anna Młyniec, Head of Office Agency and Tenant Representation, Jones Lang LaSalle, comments: “2013 was a record – breaking year on the Warsaw office market. The level of demand for office space in Warsaw outperformed the previous volume seen at the end of 2012. Record gross take-up for 2013 totalled 633,000 sq m, while high level of net take-up - 451,000 sq m - proves that companies are more keen than before to relocate and lease appropriate office space, both in terms of standard, size and price. 2013 also saw a 13-year high for new completions, reaching 300,000 sq m in such projects as e.g. Plac Unii, Konstruktorska Business Center, Miasteczko Orange, T-Mobile Office Park or Wola Center. This is expected to be followed by an even higher completion volume in 2014, with nearly 320,000 sq m to be delivered over the next 12 months to the Warsaw market. It is also worth mentioning that over 35% has already been secured with pre-lets”.
DemandQ4 saw gross take-up at 115,000 sq m (net take-up – 86,000 sq m). The largest deals in Q4 2013 included pre-let transactions signed by: a client representing the FMCG sector (10,100 sq m, Pacific Office Building), KPMG (8,300 sq m, Gdański Business Centre) and IBM (5,500 sq m, The Park A2). Significant renewals included: IBM (5,300 sq m, Wiśniowy Business Park), Budimex (6,200 sq m, Stawki 40) and Mondelez (3,600 sq m, Trinity Park III), just to name a few.
In 2013, take-up in the major office markets in Poland (excluding Warsaw) reached 370,000 sq m, comparable to 2012. These markets registered 88,000 sq m of letting deals in Q4 with Tri-City, Kraków and Wrocław taking a clear lead in respect of occupier activity for the quarter. However, in 2013 as a whole, Kraków, Wrocław and Katowice recorded the highest take-up levels of the major office markets in Poland. The largest Q4 deals were signed by Thomson Reuters (renewal of 9,000 sq m, Baltic Business Center in Tri-City), a confidential tenant (pre-let, 6,770 sq m, Silesia Business Park A in Katowice), RWE (pre-let of 3,150 sq m, Bonarka4Business building E, Kraków) and DHL (renewal of 3,050 sq m, Targowa 35 in Łódź).
SupplyNew completions in Warsaw reached 300 000 sq m meaning total office stock in Poland's capital reached 4,113,000 sq m. Further 591 000 sq m is under construction.
In 2013, excluding Warsaw, 280 200 sq m of office space was brought to market (75,000 in Q4 alone). New supply in Q4 was evenly distributed among: Wrocław (Aquarius Business House phase II and Millenium Tower IV); Kraków (Bonarka 4 Business building D and Nautilius); Tri-City (Alchemia phase I) and Lublin (Nord Office Park B&C and JPBC Business Center). Another major new addition to the market was Euro-Centrum VIII in Katowice. Lublin with the modern office stock exceeding 100,000 sq m can now be compared to Szczecin in this respect.
Currently, 493,200 sq m of office space is under active construction in the major cities of Poland (excluding Warsaw), with 340,000 sq m scheduled to be completed in 2014.
The total office stock in Poland is approximately 6,800,000 sq m.
Vacancy ratesThe high construction activity, despite healthy take-up levels, is gently pushing up the vacancy rate in Warsaw. At the end of 2013, the vacancy rate stood at 11.7% (0.8 pp higher than Q3), which equates to 481,000 sq m of vacant space.
At the end of Q4 2013, quarterly vacancy rates remained stable in six of the eight major office markets in Poland (excluding Warsaw). Slight increases were seen in Lublin and Szczecin. In some markets with extensive construction activity, slight increases in vacancy rates may be registered.
RentsIn Q4 2013, prime headline rents remained similar to those in Q3, however, there is still potential for downward movement, especially in terms of effective rents. Prime headline rents in Warsaw's city centre ranged between €22 and €24 / sq m / month and €14.50 to €14.75 / sq m / month in non-central locations, such as Mokotów. Prime headline rents outside Warsaw currently range between €11 and €12 / sq m / month in Lublin to €15.5 / sq m / month in Wrocław.
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