Office availability in the Warsaw office market is shrinking, with the vacancy rate for the whole city down to 10.6% and to just over 9% in the centre, says Savills. Tenants are, however, likely to enjoy a wider choice of options once more office projects are restarted. This process is already slowly getting underway, as is clear from the growing development pipeline.
According to Savills' latest report, Warsaw’s total office stock reached 6.2 million sqm at the end of September 2023 following the completion of 20,300 sqm of new office space across four projects, the largest being The Park (White Star Real Estate, 11,000 sqm).
The office development pipeline currently stands at nearly 263,000 sqm, of which 82% is in the city centre. Of that total, 143,000 sqm is scheduled for completion by the end of 2024.
Development activity which steadily slowed down since the onset of the Covid-19 pandemic in 2020 is gradually gathering pace, with five new office projects breaking ground in Warsaw in 2023. Some developers have, however, put projects on hold until more space is pre-let in those currently under construction,” comments Daniel Czarnecki, Head of Office Agency, Landlord Representation, Savills.
The largest office projects scheduled for delivery in 2025-2026 include The Bridge (Ghelamco, 47,000 sqm), Upper One (Strabag Real Estate, 35,500 sqm) and Towarowa 22B (Echo Investment, 31,100 sqm).
In January-September 2023, total office take-up in Warsaw reached 496,600 sqm, down by around 18% from the same time last year. Despite this, leasing activity continued to pick up pace from quarter to quarter (157,400 sqm in Q1, 165,200 sqm in Q2 and 174,000 sqm in Q3), notes Savills.
New leases accounted for 52% of the total office take-up, while pre-lets made up nearly 7% and expansions just under 4%. Renegotiations totalled almost 189,000 sqm, accounting for 38% of all deals. By comparison, renegotiations made up 39% in the whole of 2022, with new leases, expansions and pre-lets contributing 43%, 8% and 10% respectively.
Flexible office operators leased 10,600 sqm in Warsaw through six transactions, including three in new locations: OmniOffice in the Warsaw UNIT (3,200 sqm), Grzybowska Park (1,400 sqm) and Business Link in Studio B (3,000 sqm).
According to data from Savills, Warsaw’s vacancy rate stood at 10.6% at the end of September 2023, down by 1.5 pp year-on-year. Prime office rents remained unchanged at €22.5-26/sqm/month in the most prestigious locations in the Centre and €13.00-15.00/sqm/month in Służewiec. Office tenants are, however, facing high service charges.
