Warsaw on the top

In Q1 2017, six new office projects with a total area of 84,200 sqm were delivered to the Warsaw market. All of them are located outside the city centre, concentrated mainly in Żwirki i Wigury zone, where the second phase of Business Garden project totaling 55,000 sqm was completed. The next 26% of new supply is located in the West zone in the three newly built projects - EQlibrum (9,900 sqm), Airtech Business Park III (6,600 sqm) and West Warsaw Office (5,500 sqm).

As a result of the natural shift of business districts and development of plots with good accessibility (i.e. in the vicinity of the second metro line, Rondo Daszyńskiego, Dworzec Gdański Station) the Polish Office Research Forum, which Colliers International belongs to, has taken action to review Warsaw’s office zones.

“The boundaries and the zone names have been changed. The biggest changes have taken place with regard to the Central Business District, and City Centre area. The Central Business District is limited by Al. Jana Pawła II, Al. Solidarności, Hoża street and Krakowskie Przemieście with Nowy Świat. The City Centre zone was expanded to the north by Dworzec Gdański Station area, to the west by Karolkowa street and to the south by Plac Unii Lubelskiej. The east zone boundary is the Vistula river,” said Paweł Skałba, Partner at Colliers International and Director of the Office Agency.

Służewiec was set off from Mokotów zone too. The former South West area was subdivided into two areas along the main arteries - Al. Jerozolimskie and Żwirki i Wigury street.

Both City Centre and the new areas located close to the central zone are characterised by increased development activity as well as growing tenants’ and investors’ interest. The gross demand registered in first three months of 2017 in Warsaw amounted to 194,000 sqm. The highest leasing activity was observed in the City Centre zone (54,000 sqm). Substantial tenants’ demand was recorded in Mokotów zone (39,000 sqm) and Jerozolimskie Corridor (33,000 sqm).

Kraków and Wrocław are not slowing down

Approximately 13 office projects with a total area of 67,200 sqm were completed in the main regional markets in Q1 2017, most of which in Kraków (28,000 sqm) and in Wrocław (18,000 sqm). The majority of completed buildings (61%) are small projects offering below 5,000 sqm GLA – Office Park Kokoszki A in Tricity, Komandorska 12 in Wrocław, Cross Point D in Łódź or Baildona 66 in Katowice.

In the regional markets, the total volume of transactions reached the level of 178,000 sqm, about 41% higher than in the corresponding period of 2016.

“The highest tenants‘ activity was recorded in Wrocław, where 59,000 sqm were leased and in Kraków - 52,500 sqm. Interestingly, despite the fact that Kraków is a leader among regional cities in terms of office space under construction, it is distinguished by the lowest vacancy rate – 6,8%,” said Paweł Skałba.

The vacancy rate for major office markets in Poland in Q1 2017 stood at 12.1% (compared to 12.7% at the end of 2016).

700,000 sqm by the end of this year

Currently, over 1.6 million sqm of the modern office space is under construction, out of which 45% is located in Warsaw. The new supply planned to be delivered to the market by the end of 2017 is estimated at 700,000 sqm. In Warsaw, developers expect to complete projects amounting to 240,000 sqm.

The trend of operational and cost reorganization of rented space is visible among the companies operating on the market and results in relocations. Older office buildings have difficulty in maintaining their lease levels. The popularity of modernization actions undertaken by owners is growing.