JLL presents the summary of the most important events and trends on Warsaw’s office market in 2016.
Mateusz Polkowski, Head of Research and Consulting at JLL, says: “2016 was an exceptional year for the Warsaw office market, as approx. 407,000 sq m of new, modern space was completed within the city, the highest volume since 2000. The market continues apace as currently, approximately 675,000 sq m of office space remains under construction. 330,000 sq m can be delivered to market in 2017 provided that all plans announced by developers will be conducted on schedule. What is important is the fact that supply was accompanied by demand – lease agreements for approx. 755,000 sq m were signed in Warsaw in 2016. This comprises the second best result in the market’s history. New developments attracted prestigious occupiers, some global firms expanded the range of their operations in Warsaw, and a number of companies present in the city decided to renew their leases.”
The highest amount of office space was leased in the city centre (Central Business District and City Centre Fringe) – 239,00 sq m, followed by Mokotów (155,100 sq m) and the South West district (151,800 sq m).
The biggest lease deals in Warsaw in 2016
| Company | Building | Space (sq m) |
|---|---|---|
| BGŻ BNP Paribas | Office building, Kasprzaka St. | 22,000 |
| Confidential tenant, healthcare sector | Park Postępu | 12,300 |
| Confidential tenant, IT sector | Warsaw Financial Center | 8,300 |
Source: JLL, PORF, 2016
Anna Młyniec, Head of Office Agency and Tenant Representation at JLL, comments: “The most active tenants on the Warsaw office market included services and manufacturing companies, IT & Telecoms and firms from the banking sector. All told, the companies from these industries accounted for more than 74% of total demand in Warsaw in 2016. An interesting characteristic of the market was the return of Warsaw as an important location for modern business services. Examples of recent investments in the last two years in Warsaw by the sector include Credit Suisse, Dentons, DLA Piper, William Demant, or Bain & Company.”
Supply
Out of 407,000 sq m delivered to the Warsaw market in 2016, the City Centre Fringe accounted for the highest amount of supplied space (over 123,000 sq m), followed by the South West district (87,600 sq m) and the Central Business District (CBD; 72,100 sq m).
The biggest office buildings delivered to the Warsaw market in 2016
| Building | Developer |
|---|---|
| Warsaw Spire A | Ghelamco Poland |
| Q22 | Echo Investment |
| Gdański Business Center D | HB Reavis |
Source: JLL, PORF, 2016
It is interesting that the Mokotów district saw the completion of only one office building in the whole of 2016 – Wołoska 24 – which is well-below its long-term average. The construction activity in this subzone of Warsaw totals approximately 100,000 sq m.
Currently approximately 675,000 sq m of office space is under construction in Warsaw, of which 46% is located in central locations.
The biggest office buildings under construction in Warsaw
| Building | Office space | Developer |
|---|---|---|
| The Warsaw Hub | 78,000 | Ghelamco Poland |
| Mennica Legacy Tower | 61,000 | Golub GetHouse |
| Business Garden III-VII | 55,000 | Vastint |
Source: JLL, PORF, 2016
Vacancy rate
Last year brought significant fluctuations in Warsaw’s vacancy rate. By the end of 2016 it amounted to 14.2% and we can expect decreases in the rate in 2017.
Of the approx. 718,800 sq m of vacant space currently available in both new and older buildings, 32% is located in the Mokotów district (approximately 226,900 sq m).
Rents
Prime rents were mostly unchanged over the course of 2016. Currently, prime headline rents in Warsaw City Centre range between €20.5 and €23.5 / sq m / month. In non-central locations rents are at between €11 and €17 / sq m / month.
