By the end of H1 2020 demand was 335,000 sqm. In fact, demand for office space in Q2 was significantly higher than in Q1. Vacancy rates across Warsaw increased slightly by 0.1 p.p., with 770,000 sqm under construction.
Demand
The dynamics of the market, which should not come as a surprise to anyone, is definitely different from the one we have known in recent years. It is worth noting, however, that despite fears, in the second quarter demand for office space was much higher than in the first three months of the year. We are observing a revival of office space viewings. Not everyone is able to delay their office decisions any longer, all the more so because large companies have to look for suitable premises well in advance to secure an optimal solution and adequate space. Therefore, despite the high activity of developers, we are still observing a high level of pre-lets for buildings under construction.
Anna Młyniec, Head of Office Agency and Tenant Representation, JLL
Developers' focus is directed towards the City Centre, where the majority of offices are being built. This activity translates into pre-let transactions. Due to the availability of space under construction and the attractiveness of the location, as much as 87% of such contracts concluded in the first half of the year concerned buildings located in this part of the capital city.
Mateusz Polkowski, Head of Research and Consulting, JLL
Sublets back in favour
Some companies offer parts of their office for sublease in order to save additional space they have rented but do not need at the moment. Some organisations are looking at various ways to generate immediate savings but only a few companies want to reduce their office space in the long term. Will we all need less space? What will our offices be like in the future? For most companies it is much too early to answer these questions. Everyone thinks about it, tests it, analyses it but most of them have declared that their final decision will not be made any earlier than next year. At the moment, the share of sublease space in Warsaw's total stock is about one per cent. What will be crucial is what happens in the second half of the year. Another important trend in Warsaw is the growing interest in flex offices - the need for flexibility is now the common denominator of many decisions taken.
Anna Młyniec, Head of Office Agency and Tenant Representation, JLL
Supply - competition for the best offices is growing
As much as 100,000 sqm of space was delivered in Warsaw in the second quarter. What is more, much of the under-construction supply is already very well let - this is approximately 70% of pipeline scheduled for H2 2020, which is an excellent result. Moreover, the total volume of offices under construction is significantly lower than in the first quarter, and developers seem to be more cautious when starting new projects. We may also have to deal with putting back the completion dates of some investments, which may have a positive impact on the balance between supply and demand.
Mateusz Polkowski, Head of Research and Consulting, JLL
Office investment market
As many as 15 office transactions worth EUR 746 million in total were concluded in Warsaw. This is the second-best result of H1 in this decade. Investor interest focused on assets located in City Centre West, Służewiec and the Central Business District.
Tomasz Puch, Head of Office and Industrial Investment, JLL
