Last year ended well for the office property market in Warsaw. Developer activity was the highest in many years and more demand contributed to the significant drop of vacancy, says Knight Frank.
Maciej Skubiszewski, Director, Landlord Representation, Knight Frank, commented: “In 2017 Warsaw witnessed high developer activity which led to the highest volume of office space under construction in its history. Another positive signal from the market was the decrease of vacancy observed at the beginning of the year. High demand, which reached its highest level ever in Warsaw, together with new supply, a lot lower than in the record-breaking year of 2015, were the two main factors.
Last year, 23 projects delivered some 275,000 sqm of office space to the office property market in Warsaw, the vast majority of them were located outside the city centre.
Successful commercialization of projects handed over for use in 2016, encouraged developers to start new constructions. Currently, some 765,000 sqm are under construction, more than half of which began in 2017. It’s worth to underline the fact that tower properties constitute 50 percent of the volume of space under construction. The majority of these projects are located next to the Daszynski roundabout, where developers began the construction of new skyscrapers immediately after the success of Warsaw Spire.
Tenant activity remained high in the previous year. The volume of lease agreements signed in 2017, which amounted to 820,000 sqm, was 8 percent higher than in 2016 and only slightly lower than the one from the record year of 2015. Most spaces were leased in central districts.
Since the start of the year, vacancy dropped in Warsaw and amounted to 11.7 percent by the end of 2017. The last 12 months saw a drop of vacancy by 2.5 pp. The last time of such low vacancy in Warsaw was in 2013. One of the factors which helped vacancy to drop was high net absorption which amounted to 380,000 sqm after four quarters, and was the highest ever in the history of the Warsaw office market. In spite of the volume of space under construction, a further decrease of vacancy is being forecasted, mostly due to limited new supply in 2018 and high demand for prime quality offices.”