Warsaw's office vacancy rate hits a seven-year low

In the third quarter of 2019, the Warsaw office market witnessed the largest lease transactions in the history of the Polish office market. mBank signed a lease for office space in the newly-constructed Mennica Legacy Tower, while a telecommunications giant Orange concluded the renegotiations of its lease in the office complex at Jerozolimskie Avenue. According to “Occupier Economics”, a report published by real estate advisory firm Cresa Poland, Warsaw’s office stock has increased by approximately 3.1% over the year to the current 5.59 million sqm.

The volume of lease transactions amounted to nearly 700,000 sqm in the first three quarters of 2019, representing 92% of the annual average for 2013-2018. If the occupier activity remains robust, this year’s office take-up in Warsaw is likely to set a new high.

“Tenants are increasingly focusing on rising service charges which can frequently have a significant impact on total lease costs. That’s why it’s so important to conduct an audit before signing a lease in order to identify cost reduction opportunities,” says Artur Sutor, Partner, Head of Office Department, Cresa Poland.

In January-September 2019, a total of 142,300 sqm was delivered to the Warsaw market across 15 new projects. Q3 completions included Wola Retro (24,500 sqm, Develia), Generation Park Z (17,300 sqm, Skanska) and Flanders Business Park C (7,400 sqm, Liebrecht & wooD).

Office absorption amounted to 151,300 sqm in the first three quarters of 2019, down by 36% on the same period in 2018.

“More than 20,000 sqm of office space is expected to be completed in Warsaw in the last quarter of this year. Although the Occupier Sentiment Index is now 19 points, lower than in previous years, and the economic indicators are weakening, office absorption rates are likely to remain high the coming year,” says Bolesław Kołodziejczyk, PhD, Head of Research & Advisory, Cresa Poland.

Asking rents stand at EUR 13-14.5/sqm/month in Służewiec, EUR 13.5-15.5 in Jerozolimskie Avenue, EUR 15.5-19.5 in Nowa Wola, and at EUR 16-23.5/sqm/month in the Central Business District.