Warsaw is experiencing growing demand for offices, absorption of new space, decreasing vacancy rates, and is expected to see rental growth and strong investment volumes. Next year, the city should further cement its dominant position. So, why Warsaw?
Why here?
With its well-regarded brand, dynamic GDP growth y-o-y, ambitious infrastructural changes, and the largest pool of talents in Poland, Warsaw continues to attract international companies. So it’s no surprise that Warsaw’s economy is geared towards the most advanced services, most notably banking & finance, insurance, consulting and media as well as the electronics and high-tech sectors. The city’s investment attractiveness can be further enhanced by the fact that in the most recent FTSE Russell Country Classification, Poland’s status was changed from Advanced Emerging to Developed market.
Anna Młyniec, Head of Office Agency and Tenant Representation, JLL Poland
Warsaw is the CEE leader, which helps to explain the excellent growth of office supply in the city. Currently modern office stock stands at 5.4 million sqm and an additional 740,000 sqm is under construction and scheduled to be completed by 2021. This will lead to a peak in new completions in 2020. The pipeline is ambitious, but, as Warsaw is one of the most absorptive markets in Europe, this volume will not affect the balance between supply and demand.
Mateusz Polkowski, Head of Research & Consulting at JLL
In relative terms, looking at absorption versus supply, Warsaw is in first position, outperforming Western European cities such as Dublin, Frankfurt, Brussels, Madrid, Barcelona, Berlin and Lisbon, which are all widely considered to be highly competitive.
Mateusz Polkowski, Head of Research & Consulting at JLL
And why now?
Robust developer activity is underpinned by constantly increasing demand for office space. Occupier activity has been surging since 2015 and that trend is continuing, with 632,000 sqm leased between Q1 and Q3 2018. Warsaw’s excellent performance is made possible by companies from a very wide range of sectors being active on the market, including modern business services, consulting and banking sectors, as well as flexible space operators.
Anna Młyniec, Head of Office Agency and Tenant Representation, JLL Poland
In Warsaw the rental cycle has now bottomed out. Natural consequences of falling vacancy rates across the city, especially in the central areas of Warsaw, and increasing construction costs (up by approximately 30% since 2012) are rent increases in the near future. Moreover, a study conducted across the whole of Europe indicated Warsaw as one of the top cities where rental growth should accelerate because of these factors.
Mateusz Polkowski, Head of Research & Consulting at JLL
