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The Warsaw Voice » Real Estate » May 14, 2008
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Warsaw Office Market in 2007
May 14, 2008   
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In 2007, the supply of new office space in Warsaw exceeded 200,000 square meters, which increased the city's overall modern office stock to more than 2.7 million sq m. Last year saw the completion of 16 office buildings-compared with 21 buildings in 2006-with a total area of 186,700 sq m, of which 12 were completed in the first half of the year. As usual, the Mokotów district was the location of most of these projects, such as Trinity Park II, Wi¶niowy Business Park F and IO-1, which increased the district's office stock by some 63,500 sq m. Meanwhile, the Lumen Złote Tarasy, Skylight and IBC II office buildings in the Central Business District (CBD) together added another 62,430 sq m of office space.

Last year rentals of modern office facilities in Warsaw reached a record 143,000 square meters in the first quarter. This was the highest quarterly figure ever recorded in the city. The following quarters showed a slight downturn, but still 20 percent more office space was rented in 2007 than a year earlier. In total, 491,570 sq m of office space was rented in 2007, compared with 412,000 sq m in 2006.

New rental contracts accounted for over 80 percent of all rentals last year, followed by renegotiated rental contracts and tenants renting additional space. Some office space was taken for building owners' own use.

The continually high demand for office space, coupled with relatively low supply, reduced the area of vacant office space in Warsaw at the end of 2007 to just some 4 percent, compared with 5.4 percent a year earlier. In the heart of the city, the new Skylight office building was recently completed, but it will be fully let soon. The ever-growing tendency of tenants, mainly large international corporations and banks, to sign pre-let agreements before buildings are completed, has reduced the amount of office accommodation available.

The high demand for modern office facilities has encouraged developers to build more office projects. Projects currently under construction, mainly in the Mokotów district, will give Warsaw an additional 450,000 sq m of modern office space in 2008-2009. The biggest projects with completion dates this year include Okęcie Business Park, with 61,000 sq m; Platinium Business Park, with 45,000 sq m; Marynarska Business Park, 43,000 sq m; Horizon Plaza, 35,000 sq m; Park Postępu, 34,000 sq m; and North Gate, with 25,300 sq m. Besides Mokotów, other areas of Warsaw attractive to developers include the city center and the Ochota district. In Ochota, the Equator Office Building with 17,600 sq m should be available mid-year, followed by 7,600 sq m in the Batory Building in the last quarter of this year.

Among developers in Warsaw, Globe Trade Centre (GTC) is the most active in the office real estate sector, and its projects include Okęcie Business Park, Platinium Business Park, and the smaller Nefryt. Another active developer is Ghelamco, which is building the Marynarska Business Park, among other projects. Skanska will increase the number of its completed projects in Warsaw with Marynarska Point and plans to complete another office building, Atrium City near the ONZ traffic circle, at the beginning of next year.

The Warsaw office market is continually being boosted by growing interest from new developers. In 2007, new market player CPB Polska, the Polish arm of Austria's CPB Immobilientreuhand, completed the IO-1 office building in Mokotów and the Salzburg Center in Ochota, among other projects. CPB Polska is also building the Equator Office Building in Ochota, with completion set for the second quarter of this year.

The owners of office buildings in Warsaw are in a strong position because, despite the ongoing increase in modern office facilities in the capital, demand is high and the amount of vacant space remains low. The heart of the city is an excellent case in point, where the amount of untenanted office space is low, while demand is high and rents are rising; they range from 25 euros per square meter per month in Grzybowska Park to 31 euros per sq m per month in prime locations. Within the CBD, rents range from 20 euros per sq m per month in Millennium Plaza to 24 euros per sq m per month in Atrium Plaza. Outside of the business district, in Mokotów, Ochota and Wola, rents are between 14 euros in Ochota Office Park and 18 euros in the IO-1 building. New projects in neighboring Wola planned for 2009-2010 could ease demand for offices in the CBD and halt further rent increases in the business district.

Wojciech Korzeniowski, Head of Commercial Property Department at Emmerson S.A.
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