POLAND “Over 1 mln sqm of office space was leased in Q3 this year. This is over 340,000 sqm more than in the same period last year and 280,000 sqm more than in 2013,” reveals JLL in its latest report on the office space lease transactions executed in Poland over the first nine months of this year. Analysts point out that consolidations were carried out this year and large leases were signed while new companies entered the market and existing ones extended the size of their premises. New records have been set: 22,000 sqm leased by Samsung, which is to house its research and development operations in the Warsaw Spire building, and the 26,000 sqm leased by Shell for its operations centre in the DOT Office complex in Kraków.
Q3 in Warsaw
Meanwhile, the Polish Office Research Forum (PORF) has also published data on the Warsaw office market for Q3 2015 that shows dramatic growth in leasing taking place. According to the PORF’s figures, at the end of Q3 2015 the supply of modern office space in the capital of Poland amounted to 4,627,600 sqm. In the first nine months the office supply in the capital city increased by 238,300 sqm, 91,400 sqm of which was marketed in Q3. The majority of the new supply was delivered outside the city centre, where projects such as Postępu
14 (34,300 sqm, in the Upper Northern zone), Royal Wilanów (29,800 sqm, in the South Eastern zone) and the Domaniewska Office Hub (27,000 sqm, in the Upper Southern zone) were completed. Two projects were finished in the city centre: Spektrum (27,600 sqm – which was reopened following renovations) and Carpathia Office House (4,700 sqm). At the end of September 2015 the vacancy rate had decreased slightly (-0.9 p.p. y-o-y) to 12.9 pct. In spite of the decline in percentage terms, there is still an area of app. 600,000 sqm in the entire capital city immediately available. Vacancy in the two central zones was 13.9 pct, while outside the city centre it stood at 12.5 pct. In Q3 2015 the gross demand for office space came to around 222,600 sqm, thanks to which the total volume of transactions registered since the beginning of the year was pushed up to 612,800 sqm – the same figure as for 2014 as a whole. The most activity took place in the Upper Southern zone (174,700 sqm), the City Centre Fringes (155,500 sqm) and the Western Southern zone (81,000 sqm). Over the period, the demand broke down into new contracts with 62.7 pct of the total and renegotiations with 28.4 pct. Pre-leases constituted 15.5 pct of the total volume. According to the PORF, the largest transactions concluded in the first three quarters of 2015 included: PZU (new contract, 17,500 sqm in Konstruktorska Business Center), EY (renegotiation, 13,500 sqm, Rondo 1) and Aviva (pre-lease, 12,000 sqm, Gdański Business Center II).
Record high absorption
According to another recent report, the ‘Market View – Warsaw Office Market in Q3 2015’ survey by CBRE, in the July/September period over 200 companies leased more than 220,000 sqm of office space, which is a record high result. Over the first three quarters the leasing level reached 612,000 sqm. The level of absorption (i.e. the area leased for the first time to tenants) also hit a record high in Q3 of 132,400 sqm. The absorption has already reached the level of 244,100 sqm, which is 27 pct more than for the whole of 2014. This confirms that companies are moving to new buildings and developing through expansion (80,000 sqm in the first three quarters) while new tenants are also entering the market, for instance, F5 Networks. A considerable volume of office space is also to be added to the market in early 2016 and the vacancy rate is expected to grow as a result, at least until mid-2016. “The next few quarters will certainly change the office landscape of Warsaw and the situation on the market,” claims Łukasz Kałędkiewicz, the director of the office agency at CBRE. “A total of 44 office buildings are under construction and the supply in the centre of Warsaw is to increase by 23 pct. We are seeing a gradual decline in the amount of speculative projects and a growing number of buildings awaiting the large preliminary contracts needed to start the construction process. However, a good project is still able to stand its ground and be well commercialised upon completion,” adds CBRE’s expert.
