Due to the prolonged COVID-19 epidemic, some tenants on the Warsaw office market are postponing relocations, looking for sublessees or downsizing their offices. According to the Cresa Polska report "Occupier Economics: Office market in Warsaw in the third quarter of 2020", office take-up amounted to 113,000 sqm in Q3 2020, which is the weakest quarterly result in the last 10 years. Warsaw’s office stock reached 5.8 million sqm.
“After the strong first two quarters of 2020, the data for the third quarter indicate a market downturn. This was caused by the prolonged pandemic, which is reshaping market behaviours. Tenants are showing more caution in making long-term commitments and many are postponing relocations or lease renegotiations until later. Some are downsizing or subletting their premises, resulting in more space for sublease coming onto the market. Tenants who are unable to optimize their office space are considering a move to alternative locations upon lease expiry or taking occupancy of a smaller office,” says Artur Sutor, Partner, Head of Office Department at Cresa Poland.
The city’s total office stock amounted to 5.8 million sqm at the end of Q3 2020, up by 4.2% year-on-year. The third quarter saw six office completions which delivered more than 131,000 sqm of office space to the market: The Warsaw HUB B and C (a total of 89,000 sqm, Ghelamco), Browary Warszawskie – Biura Przy Warzelni (24,000 sqm, Echo Investment), The Park 7 (10,000 sqm, White Star), Kosmatki 8 (4,000 sqm, Semi Line), Kolonia Sielce (2,600 sqm, OMIG Sielecka) and Bolero Office Point II (1,950 sqm, Real Management).
Office take-up totalled 446,700 sqm in the first three quarters of 2020, down by 35% on the same period last year. New leases accounted for 59% of the leasing activity, followed by renegotiations and expansions which made up 34% and 7%, respectively. In Q3 2020 office take-up totalled 113,200 sqm.
The largest lease in Q1-3 2020 was the pre-let agreement signed in Generation Park Y by PZU (46,500 sqm). It was followed by a new transaction by DSV in DSV HQ (20,000 sqm). Poczta Polska extended its lease and expanded to 19,000 sqm at Domaniewska Office Hub. Other transactions similar in size included: a renegotiation of 17,500 sqm at Konstruktorska Business Center by a confidential tenant and the lease agreement signed by Allegro at the Norblin Factory (16,200 sqm).
Absorption climbed to a total of 114,100 sqm in January-September 2020 and amounted to 20,500 sqm in Q3 2020 alone. The vacancy rate stood at 9.6% at the end of Q3 2020, up by 1.4 pps on the same period last year and up by 1.7 pps on the previous quarter.
Asking rents stand at €11-14,5 sqm/month in Służewiec, €12-15 in Jerozolimskie Avenue, €17-21 in City Centre West and at €19-24 sqm/month in the Central Business District.
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