Will Warsaw’s Vacancy Rate Hit a Single-Digit Figure Again?

According to “Occupier Economics: Office Market in Warsaw in Q3 2018”, the latest report published by real estate advisory firm Cresa, Warsaw’s total office stock has risen by more than 3.75% over the year to 5.42 million sqm, the absorption rate is down by 1.4% compared with Q3 2017. The vacancy rate is at 10%.

“Demand on the Warsaw office market remains strong with effective rents coming under upward pressure amid limited supply. This is most notable in central locations attracting robust occupier interest. The market is expected to stabilise in 2020, when several large office buildings will be completed in the vicinity of Daszyńskiego Roundabout,” says Bartek Włodarski, Partner, Head of the Office Department, Corporate Solutions, Cresa Poland.

In Q3 2018, absorption amounted to 69,500 sqm with the cumulative absorption in the year to date at 237,500 sqm. Leasing activity surpassed 633,000 sqm in the first three quarters of 2018, which represented an increase of more than 7.5% compared with last year. Consulting firm Deloitte’s 22,100 sqm renegotiation and expansion at Q22 was a high-profile transaction on the Warsaw market in Q3 2018.

Two office projects were completed in Q3 2018: Park Avenue (12,500 sqm, Park Projects) and Building C of Koneser Centrum Praskie (3,800 sqm, BBI Development / Liebrecht & Wood). No major office completions are scheduled for delivery by year-end 2018. New office supply hit nearly 190,000 sqm in the first three quarters of 2018, down by 7.4% on the same period in 2017.

Asking rents vary by district, standing at EUR 10.5-14/sqm/month in Służewiec, EUR 13-19/sqm/month in Nowa Wola and EUR 16-23.5/sqm/month in the city centre.

“With high occupancy levels at office projects in the pipeline and the growing base effect, the city’s vacancy rate remains under downward pressure, a notable development for tenants. RICS surveys have revealed that the Occupier Sentiment Index in Poland is currently at 29 points, up by 30 points compared with last year. This high level is good news for investors and developers,” says Bolesław Kołodziejczyk, PhD, Head of Research and Advisory, Cresa Poland.

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