Warsaw office sector saw the lowest volume of space under construction in 11 years along with relatively low tenant activity. However, the business services sector provides hope for the future.
The first quarter of 2021 brought a continuation of last year’s trends, which were reflected in lower developer and tenant activity caused by the pandemic. The volume of office space under construction and demand on a quarterly basis are the lowest in 11 years. It is worth noting, however, that the ongoing processes, together with growing interest in the Warsaw market from the modern business services sector, may have a positive impact on the volume of lease transactions in the next few months. Furthermore, companies are increasingly confident in planning their return to the office. Most of them assume autumn 2021 is doable,
comments Tomasz Czuba, Head of Office Leasing and Tenant Representation, JLL
Demand – tenants' cautious attitude
The relatively low level of tenant activity was mainly caused by uncertainty regarding the size of offices after the return to the new normal. At the same time, however, we can observe a slight slowdown in the growth dynamics of sublease offers, which was one of the dominant trends in the Warsaw market last year. Currently, there is over 120,000 sqm available for sublease in the capital, which is approximately 10,000 sqm less than at the end of last year,
says Mateusz Polkowski, Head of Research & Consultancy, JLL
Flexes have entered the stabilization phase
Currently, the occupancy of flexible offices in the central office zones of Warsaw remains at a fairly high level. Last year, we could see a lot of fluctuation in the flex segment, which translated into significant changes in rates per workstation. Currently, we are seeing a stabilization in prices and we can assume that the worst is behind us,
explains Adam Lis, Flexible Office Solutions Manager, JLL
Supply – Warsaw offices now offer six million sqm of space
In Warsaw, after several years of steadily increasing developer activity, the volume of space under construction has decreased significantly. Developers are more cautious about starting projects, and in recent months only one new investment has been launched in Warsaw – The Bridge by Ghelamco Poland. As a result, in 2023 we can expect a supply gap. It will be especially visible outside the city centre,
comments Tomasz Czuba
Vacancy rates and rents
A significant number of owners, primarily of top-tier buildings, continue to pursue relatively rigid policies regarding the rates they offer and the length of lease agreements. Nevertheless, the tenant incentive package is growing, particularly with the fit-out budget. An exception among "prime" assets are some offices under construction. Their owners are willing to accept much more favourable terms regarding rates, incentives and other elements of the lease agreement in order to conclude the first contracts,
comments Tomasz Czuba
