Poland Warsaw tenants find the right balance

Walter Herz's analysis shows that the location and good access to public transport are the most important factors for companies when choosing office space on the Warsaw market. These indicators are followed by the standard of the building and the budget for renting an office, which shows that companies are looking to strike a balance between expenses on maintaining a workplace and its location and standard of space. At the same time, in the case of small companies, costs are the most important, while for larger ones, location is more important.

Interestingly, ESG-related matters are not among the priorities when choosing offices. Only 8 pct of respondents surveyed by Walter Herz indicated social, environmental and climate responsibility as a key factor when making rental decisions. Mostly, only large, international corporations pay attention to the aspects of sustainable development. With a very strong global trend in this aspect, the awareness of the importance of this factor among tenants of Warsaw offices seems to be very low.

The survey conducted by Walter Herz among the management and senior management of companies from 27 industries, also made it possible to indicate what function companies currently assign to office space. The study was also aimed at determining tenants' satisfaction with the currently occupied space and identifying their requirements related to current trends on the office market.

The expectations related to what the current function of the office is supposed be turned out to be diverse. Respondents believe that an office should combine business and employee needs. The office space is to represent the company and serve as a place for meetings with clients, thanks to the possibility of comfortable use of multimedia and conference rooms. At the same time, the team-building role of the office and the support of the team's work with the extensive technological infrastructure it provides, turned out to be equally vital.

Walter Herz analysts admit that the results of the study allow for an optimistic outlook on business development in Warsaw. 70 pct of the surveyed companies are planning business expansion, which is a very good signal for the development of the Polish economy. For 30 pct of the surveyed organizations, it is important to maintain business at the current level.

The survey results show that less than half of the companies have carried out work related to the management of workspace in the last 24 months. One-fourth of the surveyed businesses changed their office during this time. The main reason for such a decision was the end of the lease period, and the low standard of the building, while the expansion of the business most often prompted companies to change their location. About 15 pct of respondents declared that the decision to change was influenced by the hybrid work model and less use of the office by employees.

Almost 60 pct of companies that faced a choice regarding the location of the workplace remained in the same building after renegotiating the contract or rearranging the space. They were motivated primarily by favourable financial conditions and good relations with the landlord. Higher costs of renting a new office constituted a barrier for 15 pct of respondents, while for 10 pct it was the high cost of arranging the new space.

In general, more than 80 pct of the surveyed companies believe that the current office meets their needs. Most tenants do not plan to change their office, only one third of respondents declare looking for a new workspace soon. The most frequently indicated reason why an office does not meet the requirements of companies is the poor standard of the building, as well as not enough space and the lack of meeting rooms. Other reasons include poor location, lack of security, too much space compared to the needs and rent increase.

The analysis also shows that only 38 pct of the surveyed businesses conducted a work-place study. For a large group, almost three-thirds of the companies, the analysis of the work environment confirmed satisfaction with the occupied space. Nevertheless, as much as 56 pct of them declared further expansion, which is related to the intention to look for new space.

Walter Herz experts point out that in 2022, Warsaw office market returned to the best periods in history in terms of demand, and this year the trend continues. Limited new supply and high interest in renting mean that we can talk about a deficit of vacant office space in Warsaw. At the end of Q1 2023, the vacancy rate in the central business area of the city dropped to around 10 pct, which generated a slight increase in rental rates in prime locations. The drastic decline in the investment activity of developers and the lack of a new offer in Warsaw mean that older, well-located office buildings are coming back. Developers are turning to the modernization of such facilities and replacing obsolete office buildings with modern buildings.