Warsaw office market – Q1 2024

Due to the fact that many companies decided to finalize agreements in late 2023, the first quarter of 2024 recorded significantly lower transaction volumes. The total demand for offices during this period amounted to 139,400 m², which is approximately 11% below Q1 2023’s result.

In Q1 2024, nearly 50,000 square meters of modern office space was completed, of which 15,500 m² was generated by the renovation of an existing office building, Saski Crescent (CBD). Among the new projects, the largest completed investments were two buildings within the Lixa complex, with a total area of 26,300 m². The amount of space under construction remains relatively stable. At the end of March 2024, it was approximately 270,000 m². Nearly 90% of this space is located in the city centre, mainly in the vicinity of the Daszyński Roundabout.

The first quarter of 2024 saw a slight uptick in the vacancy rate, which stood at 11.0% at the end of March (compared to 10.4% at the end of 2023).

After a relative period of stabilization in 2023, rental rates for prime office spaces returned to an upward trend. This applies to all Warsaw office zones. Currently, in the city centre, rents range from €18.00 to €27.00/m²/month. For other areas, average monthly rates range from €13.75 to €18.50/ m²/month, although offers at €12.00-€13.50 can still be found on the market.

The moderation of bidding intensity and the still elevated cost for debt led to an upward movement in office yields in 2023. The growing number of active bidders, observed in the first months of 2024, may be a sign of stabilisation of the current prime cap rate levels. As of the end of March, the yield for prime Warsaw assets, with lease agreements exceeding five years, was expected to be around 6.00%.