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Warsaw’s highest demand is registered in Mokotów district. Poland’s office stock to grow by over 660,000 sq m in 2014, with Warsaw taking clear lead, followed by Kraków, Wrocław, Katowice and Tri-City.
International advisory company JLL presents its latest report
summarising Q1 and analysing key trends on the office market in Warsaw
and other major Polish cities.
Tomasz Czuba, Head of Office Agency, JLL,
said: “The Warsaw office market continues to see healthy levels of
occupier demand. In Q1 2014 alone, approximately 136,400 sq m was
leased, with Mokotów taking a clear lead with a 37% share of gross
take-up volume. Pre-letting activity, however, was flat when compared to
previous quarters, with only an 8% share in gross take-up. This may be
due to the higher availability of existing vacant office space on the
market. Nevertheless, we expect some large pre-lets to be closed in the
upcoming quarters. In our opinion, demand in Warsaw will remain sound,
thanks to solid economic fundamentals and very positive GDP projections
98,500 sq m was leased in major office markets in Poland
(excluding Warsaw) in Q1 2014, comparable to Q1 2013 (the net take-up of
81,200 sq m was down by 9%). Kraków, Wrocław and Katowice took a clear
lead in respect of occupier activity in Q1. New deals constituted 50% of
signed contracts (pre-lets - almost 30%).
Supply – high developer activityIn Q1 2014, ca
84,300 sq m was delivered to the market, including Atrium 1 (16,200 sq
m), Park Rozwoju I (16,000 sq m), Gdański Business Center (15,000 sq m)
or The Park B2 (10,000 sq m), to name just a few. Total completion
volume is expected to reach ca. 320,000 sq m this year and will
outperform 2013 in this respect. It is estimated that 26% of office
space scheduled for Q2–Q4 2014 has been pre-leased already. Developer
activity in Warsaw remains high, with more than 611,000 sq m of modern
office space under active construction.
Q1 2014 brought 60,500 sq m
of new office space outside Warsaw, of which 40% was in the Tri-City
(two office buildings: 15,300 sq m in Centrum Biurowe Neptun and 8,800
sq m in BPH Office Park C) and 26% in Wrocław (15,500 sq m in Green
Day). Other major new additions to the market include A4 Business Park
phase I (8,700 sq m) in Katowice and Pascal (5,350 sq m) in Kraków. As a
whole, 2014 is expected to see a 22% increase on 2013's new supply
volume (342,000 sq m vs. 280,000 sq m). Interestingly, by the end of
2014 Wrocław and Kraków will each exceed 600,000 sq m of modern office
stock. Currently, 570,000 sq m of office space is under construction in
Poland’s major cities - the majority of which is found in Kraków,
Wrocław and the Tri-City.
A total of 1,200,000 sq m of modern office space is currently under construction in Poland.
Vacancy rate The vacancy rate in Q1 2014
remained stable when compared to the end of 2013. At the end of March
2014, approximately 12.2% of the modern office stock in Warsaw was
vacant (13.2% in the CBD, 9.5% in the City Centre Fringe and 12.7% in
Non-Central locations). Due to the large pipeline volume, the market is
expected to see a slight upward pressure on these numbers in 2014.
As of end of Q1 2014, vacancy rates remained stable in Kraków,
Wrocław and Łódź, whilst a slight increase was seen in the Tri-City
(13.9% vs. 12.5% in Q4 2013). Other major office markets have seen a
decrease in vacancy levels. There is no uniform picture regarding
vacancy rate expectations in Q2–Q4 2014.
Rents – depending on the cityPrime
headline rents in Warsaw remained relatively stable when compared to the
end of 2013. Prime office space in Warsaw City Centre leases at between
€22 and €24 / sq m / month. The best Non-Central locations, such as
Mokotów, are being leased at €14.50 to €14.75 / sq m / month. Due to an
increase forecast in vacancy rates, there will be further downward
pressure on rents, especially on effective rents.
Prime headline rents currently range from €11 to €12 / sq m / month
in Lublin up to €14.5 to €15.5 / sq m / month in Wrocław. Some slight
downward rental pressures may be seen on selected markets in Q2–Q4 2014.
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