Blue suburban skies

Warsaw\\\'s Central Business District is not the beginning or the end of the capital\\\'s office market. There are two sub-markets outside the centre that are of increasing importance for developers and tenants

Wola lies directly to the west of the city centre, and Mokotów further out and to the south. Although both were formerly industrial parts of town, the development of the two districts as business locations happened quite differently.
Mokotów was the first of the two to emerge as an office destination. The process began with two major developments from GTC: Mokotów Business Park (MBP) with 120,000 sqm of office space and the Galeria Mokotów shopping mall. This area, around ul. Wołoska, ul. Marynarska and ul. Domaniewska, is the main focus for office projects in the district. Anna Kot, an associate director of the Office Agency of Jones Lang LaSalle, claims that: "Big names came and encouraged others to follow, and soon Mokotów was considered the first business district in Warsaw outside the centre." Amongst these big names are LG Electronics, Shell and Phillip Morris.
According to Jeroen van der Toolen, managing director of one of the developers operating in the area, Ghelamco Poland, the location is attractive because Warsaw airport is not far away, and also close by are the residential areas of Ursynów, Wilanów and Konstancin, home to a lot of middle and higher management.

Cars, trams and trains
Another of the main advantages of the area is that it is well supplied with public transport, in the form of trams, buses and the metro. However, the road system is in desperate need of an overhaul. Anna Kot cites the congestion as "the major complaint from the people we have." However, Jeroen van der Toolen disagrees that this puts the district at a disadvantage with other parts of the capital: "Mokotów has traffic problems - but so does everywhere else in Warsaw."
This problem is being addressed and road improvements are now underway. But Anna Kot of Jones Lang LaSalle is not entirely convinced that this will solve the problem: "The question is, will even these improvements be able to cope with the scale of the new investments?"
Amongst these is Ghelamco\\\\\\\\\\\\\\\'s Trinity Park I, which opened on March 1st, and is 100 pct leased, with 10,000 sqm of the total 18,500 sqm of space to be occupied by Axel-Springer. This will be followed in December by Trinity Park II, which will add another 23,500 sqm. Also from Ghelamco is Marynarska Business Park, on the corner of ul. Marynarska and ul. Taśmowa, which will eventually bring 42,000 sqm to Mokotów\\\'s office market. The 30,000 sqm first phase will start around Q3 of this year and is expected to be completed in early 2008.
Other developments coming soon include Pewex Holding\\\\\\\\\\\\\\\'s Cirrus building at ul. Marynarska 11 (12,855 sqm) in Q2 of this year. Pewex also owns more land behind the site which has the potential, if they decide to develop it, to rival MBP in terms of office space. GTC\\\\\\\'s 6,016 sqm Topaz will come onto the market soon, and Vision Investment\\\'s Mokotów Plaza (16,300 sqm) at the end of this year. GTC also intend this year to begin the Nefryt building, on land they own next to Topaz, as well as the first building of the 40,000 sqm Platinum Business Park on ul. Domaniewska. Within MBP, they have plans to begin the 18,500 sqm Wega building, which should be completed by 2008. Last year, Echo Investment\'s subsidiary, Wan-11, commissioned a 20,400 sqm building on ul. Postępu, but no starting date has yet been given. At the moment, there is 415,064 sqm of modern stock in Mokotów, the largest amount outside the Central Business District (CBD). In total, 119,400 sqm of offices are under construction and 161,500 sqm is planned.

Owners get the upper hand
Headline rents in Mokotów are at around EUR 13-14 per sqm, but perhaps the most startling statistic is the vacancy rate - a mere 4.18 pct. Most people in the office real estate business regard anything below 10 pct as a landlords\\\\\\\' market. Anna Kot believes that "the situation in the area is a healthy one. This is the first area outside the city centre that is experiencing a rent-stabilisation and for the next few years, rents should be pretty stable - so a majority of the available space should be pre-leased by the completion of the buildings." However, anyone looking for 4,000 sqm of office space in Mokotów at the moment is in for a frustrating time.

The west wing
Wola is the next most important office district in Warsaw and developed as the city spread westwards. In recent years, office projects have been concentrated around ul. Prosta, ul. Kasprzaka and ul. Towarowa.
The first office developments in this area were by owner-occupiers, such as Kredyt Bank, Bank Pekao, NBP Bank, BGŻ Bank and BPH Bank; other financial institutions soon became tenants in the area, seeing the advantage of premises close to the kind of companies they co-operate with. These include Commercial Union and Gerling. In this way, the perception of Wola as a business district was created, and this in turn encouraged speculative developments. There is now 220,000 sqm of office space in Wola - 40 pct still in the hands of the original owner-occupiers.
Amongst the speculative developments are: the 44,300 sqm Warsaw Trade Tower completed in 2000, which is now owned by Apollo-Rida; Acciona Inmobiliaria\\\\\\\'s 22,000 sqm project Towarowa Park at ul. Prosta 28 (to be ready next year); and Ghelamco\\\'s 10,800 sqm Crown Point, 8,500 sqm Crown Tower (both completed) and Prosta Office Center, 18,600 sqm of which is already built. "By the end of this year, Ghelamco will have about 40,000 sqm developed in Wola," says Mr van der Toolen, "and hope eventually to have built another 100,000 sqm in the coming years - we still have plenty of land in the district." Wola now has about 22,700 sqm of offices under construction. Average rents in the district vary between EUR 13 and 15/sqm, and vacancies stand at 2.52 pct - excluding buildings within the CBD.

Which one?
Similar to Mokotów, Wola contains a lot of space available for developers. On the downside, there is no metro, and won\\\'t be until at least 2012. Wola does not enjoy the extensive public transport of Mokotów, but on the other hand it does not suffer from the traffic problems that the latter currently has, and is quite close to Warsaw\\\'s central railway station. Land prices tend be similar in both districts, ranging from around EUR 500 to EUR 1,000 for freehold sites in the best locations. But Tomasz Trzósło, the Polish national director for capital markets for Jones Lang LaSalle, points out one difference: "In Wola it is more likely you could find bargains with post-industrial land, for example behind ul. Kasprzaka, that could sell at prices well below EUR 500." However, he adds that "the investors need to carefully check the environmental aspects as some of the sites with industrial pasts may be contaminated."

Nathan North