Developer activity in the Warsaw office space market is progressively increasing. More than 70,000 sqm finished by the end of September 2024 and around 280,000 sqm under construction in the coming years demonstrate that investors and developers are moving the industry forward. Take-up stays steady at roughly 490,000 sqm in Q1-Q3 2024. Axi Immo summarizes the present condition in the capital's office market.
From the beginning of 2024, ¾ of new office space was delivered in the capital’s central zones
At the end of Q3 2024 on the Office Market in Warsaw, the total stock of modern office space in Warsaw stood at 6.24 million sqm Between January and September 2024, developers supplied more than 70,000 sqm to the capital’s market, with completed developments including Saski Crescent after modernisation (15,500 sqm, CA Immo), Vibe A (15,000 sqm, Ghelamco), Lixa D and E (9,300 sqm and 16,900 sqm respectively, Yareal). As much as 76% of the new space was developed in the central office zones of Warsaw.
Daszyńskiego Roundabout is the largest office centre in Warsaw
Emilia Trofimiuk, Research Manager, Research Department, Axi Immo, comments: “On the Warsaw office market, we are seeing a gradual return of developers to somewhat more activity. Developers are initiating new investments, emphasising the city’s centre zones. The Centre-West office subzone, near Daszyńskiego Roundabout, has 1.15 million sqm of existing space, accounting for about 18% of the capital’s total office stock. In turn, the whole Warsaw office market has 15% more new supply under construction than last year, showing a steady recovery of developer activity and additional market expansion in the future years.”
Office developers’ activity in Warsaw is increasing
There are now over 280,000 sqm of contemporary office space under development (+15% year on year), with around 200,000 sqm expected to be completed by the end of 2025. Developers are concentrating on the centre of Warsaw, where 82% of new stock is being built. One office project, The Form, with a total area of 28,300 sqm, is on track to be finished by the end of 2024. Other notable projects under development include The Bridge (47,000 sqm, Ghelamco), Upper One (35,900 sqm, Strabag), and V Tower (32,700 sqm, being modernised, Cornerstone).
The Służewiec and Żwirki i Wigury zones have the most available office space
After the third quarter of 2024, the average vacancy rate in Warsaw’s office market was 10.7% (-0.2 percentage points quarterly and +0.1 percentage points year on year). Traditionally, Służewiec (19.7%) and the Żwirki i Wigury Street corridor (15.2%) had the greatest vacancy rates.
Tenant Activity in the Status Quo
Since the beginning of 2024, gross take-up in the Warsaw office market has reached roughly 490,000 sqm, suggesting stability compared to the same time in 2023. From January to September 2024, the Centrum, Służewiec, and Central Business District zones had the most leases. New agreements accounted for 44% of all transactions in the take-up structure, while expansions and space for personal use accounted for 7% and 6%, respectively.
Largest recorded transaction in the Warsaw office market from Q1 to Q3 2024
Bartosz Oleksak, Associate Director, Office Space Department, Axi Immo, said: “Since the beginning of the year, tenants from the banking, insurance, IT, business services, and manufacturing sectors have been the most active in the Warsaw office market. According to observed trends, client relocations from neighbouring office zones and subzones to the region of Daszyńskiego Roundabout continue to be significant. These are demonstrated by the largest transaction in Q3 2024. Santander Bank will relocate from the Central Business District zone to The Bridge building in the Centre-West zone, occupying a 24,500 sqm space under a pre-let agreement. Axi Immo represented a customer that relocated from Mokotów-Służewiec to a new office space near Rondo Daszyńskiego, measuring roughly 1,300 sqm.”
Rental rates stabilisation
In the Warsaw Office market at the end of Q3 2024, offer rentals in Warsaw’s most renowned, centrally situated office buildings varied between €19.00 and €27.00/sqm/month, with some schemes reaching €30.00/sqm/month or more. In non-central districts, offer rentals began at €10.00 per sqm monthly.
Changing tenant preferences and new norms in Warsaw workplaces Jakub Potocki, Associate Director, Office Space Department, Axi Immo, explains: “We are witnessing a trend towards lengthening the duration of new leases, with 7-year leases becoming more common. Following the pandemic, corporations are attempting to maximise their office space by shifting to more desirable locations and altering workplaces to satisfy the demands of employees in a hybrid model. In the Warsaw office market, the minimal cost of completing the shell and core space stays about €800-900 per sq m. In addition, the capital’s office sector is experiencing the repositioning and refitting of older B-class office buildings and the conversion of purpose to residential. Many instances of this can be seen today in the Służewiec district, among others. Another tendency is the destruction of older office buildings to use the available land to develop contemporary office structures that meet current market criteria. Replacing the destroyed Atrium International office building with the newly planned Upper One project is one example of such a procedure in which the office function will be maintained. The new buildings continue the ESG trend by providing additional green space and community amenities. Office buildings are also implementing various technological innovations to save energy expenditures.”
