Demand for offices continues apace – lease agreements for 360,100 sqm were signed in H1 2016. For the first time two office skyscrapers, namely Warsaw Spire A and Q22, have been delivered to the market in one year, according to JLL summarizing H1 2016 on Warsaw’s office market.
“After an outstanding 2015, the Warsaw office market held firm with 360,100 sqm of lease agreements signed in H1 2016,” commented Anna Młyniec, Head of Office Agency and Tenant Representation, JLL. “Office space located in the wider City Centre proved to be most popular with tenants, followed by the Mokotów district.”
Of the 360,100 sqm leased in total in H1 2016, Q2 accounted for 217,800 sqm of space. In the City Centre, 122,200 sqm of space (one third of the total office demand in Warsaw at the time) had been leased since the beginning of 2016, while in Mokotów district – 80,800 sqm.
High activity among tenants confirmed the strengthening of traditional business locations in Warsaw as well as the growing importance of new locations. It is worth underlining the growing demand registered in the areas around Aleje Jerozolimskie and Żwirki i Wigury streets as well as in the areas adjacent to Warsaw Chopin Airport (68,500 sqm in H1).
Almost 156,700 sqm of the office space leased in H1 was for new deals in existing buildings, with a further 62,000 sqm constituting pre-lets. Expansions accounted for almost 31,600 sqm while renewals totalled 109,800 sq m. This positive trend in demand for office space is likely to continue through H2 2016 and 2017.
“In H1 2016, a record-breaking 350,100 sqm of modern office space entered the market in Warsaw. It is 26 percent more than the whole of 2015. One key event was the completion of two office skyscrapers – Warsaw Spire A and Q22. For the first time two office skyscrapers were delivered to the market in one year. It is also worth underlining that the City Centre accounted for the highest amount of office space completed in H1 2016,” commented Mateusz Polkowski, Associate Director, Research and Consulting, JLL.
The largest H1 openings included the aforementioned Warsaw Spire A (59,100 sqm) and Q22 (46,400 sqm), as well as Gdański Business Center D (29,300 sqm), Proximo I (28,700 sqm). 237,000 sqm of space was delivered to market in Q2 alone.
Around 545,000 sqm of new office space remains under active development in Warsaw. Areas adjacent to the Rondo Daszyńskiego Roundabout are without a doubt recording the highest construction activity. The biggest projects under development in this area include Sienna Towers (Ghelamco), Proximo II (Hines), Generation Park X (Skanska Property Poland), Wronia 31 (Ghelamco) and Spark C (Skanska Property Poland).
In H2 2016, the Warsaw office market stock will hit the 5 million sqm mark.
By the end of H1 2016, the vacancy rate in Warsaw stood at 15.4 percent. However, as the number of office schemes planned to be completed in the remainder of the year will be smaller than in H1, the vacancy rate is expected to stabilize.
Currently, prime headline rents in Warsaw City Centre are between €21 and €23.5 / sqm / month. Non-Central locations lease at €11 to €18 / sqm / month.
