Record demand for office space in Warsaw in H1

Paweł Skałba, Partner at Colliers International, Director of Office Agency

At the end of the H1 2017, total supply in the nine major markets in Poland reached almost 9.3 million sqm. Over the first six months, developers completed over 300,000 sqm of office space, with more than 130,000 sqm being completed in the capital. Kraków was the regional city with the highest growth (80,900 sqm) – according to the latest report by Colliers International.

In the H1 2017 in Warsaw, sixteen new buildings were delivered to the market with a total leseable area of 131,000 sqm. The largest office building completed in H1 2017 is Business Garden (a complex of five buildings) situated on the Żwirki i Wigury corridor offering 54,800 sqm. In regional markets, 34 office projects were completed with a total area of 190,000 sqm. Most of the projects have an area below 10,000 sqm.

Within the first six months, the volume of transactions in the nine major markets amounted to 723,000 sqm. Total leasing activity recorded 15% growth compared to the corresponding period of the previous year. Warsaw reached the record amount of leased space - 391,400 sqm - which is the highest half-year number in history. Most contracts (over 30% of total demand) were signed in the City Center zone (115,400 sqm). In H1 2017, gross demand in regional markets amounted to 331,400 sqm, a 23% increase compared to the corresponding period last year. A significant proportion was made up of agreements signed in Kraków (30% of the total volume) and Wrocław (28% of the total volume).

The vacancy rate in Poland recorded a slight decrease to 11.9% compared to 12.1% at the end of Q1 2017. The vacancy rate for Warsaw decreased by 0.1 p.p. to 13.9%, which can be seen in the 715,800 sqm of vacant space. The lowest vacancy rates in regional cities were recorded in Łódź (6.0%) and Tricity (7.8%).

Base rents remained unchanged. Office space in Warsaw was offered from EUR 12 to EUR 22/m² per month, while in regional cities from EUR 10 to EUR 16.5/sqm per month.

We can still observe increased activity among developers. Over 40% of the total amount of space under construction in Poland is being built in the capital. In regional cities, most space is being built in Kraków (290,000 sqm), Wrocław (260,000 sqm) and Łódź (150,000 sqm).

“1.7 million sqm of new office space is currently under construction, with Warsaw accounting for over 720,000 sqm. The situation on the office market is favourable for tenants. Developers are offering very interesting projects and large incentive packages. Increasingly, owners are also modernising older facilities,” said Paweł Skałba, Partner at Colliers International, Director of Office Agency.

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