Poland Warsaw office market back in the game

At the end of Q3 2024, the total stock of modern office space in Warsaw stood at 6.24 mln sqm. Between January and September 2024, developers supplied more than 70,000 sqm to the capital's market, with completed developments including Saski Crescent after modernisation (15,500 sqm, CA Immo), Vibe A (15,000 sqm, Ghelamco), Lixa D and E (9,300 sqm and 16,900 sqm respectively, Yareal). As much as 76 proc. of the new space was developed in the central office zones of Warsaw.

Rondo Daszyńskiego is the largest office centre

On the Warsaw office market, we are seeing a gradual return of developers to somewhat more activity. Developers are initiating new investments, emphasising the city's centre zones. The Centre-West office subzone, near Rondo Daszyńskiego, has 1.15 mln sqm of existing space, accounting for about 18 proc. of the capital's total office stock. In turn, the whole Warsaw office market has 15 proc. more new supply under construction than last year, showing a steady recovery of developer activity and additional market expansion in the future years.
Emilia Trofimiuk, research manager, Research Department, Axi Immo

Office developers' activity is increasing

There are now over 280,000 sqm of contemporary office space under development (+15 proc. year on year), with around 200,000 sqm expected to be completed by the end of 2025. Developers are concentrating on the centre of Warsaw, where 82 proc. of new stock is being built. One office project, The Form, with a total area of 28,300 sqm, is on track to be finished by the end of 2024. Other notable projects under development include The Bridge (47,000 sqm, Ghelamco), Upper One (35,900 sqm, Strabag), and V Tower (32,700 sqm, being modernised, Cornerstone).

Vacant Służewiec and Żwirki i Wigury zones

After Q3 2024, the average vacancy rate in Warsaw's office market was 10.7 proc. (-0.2 percentage points quarterly and +0.1 percentage points year on year). Traditionally, Służewiec (19.7 proc.) and the Żwirki i Wigury corridor (15.2 proc.) had the greatest vacancy rates.

Tenant activity in the status quo

Since the beginning of 2024, gross take-up in the Warsaw office market has reached roughly 490,000 sqm, suggesting stability compared to the same time in 2023. From January to September 2024, the Centrum, Służewiec, and Central Business District zones had the most leases. New agreements accounted for 44 proc. of all transactions in the take-up structure, while expansions and space for personal use accounted for 7 proc. and 6 proc., respectively.

The largest recorded transaction

Since the beginning of the year, tenants from the banking, insurance, IT, business services, and manufacturing sectors have been the most active in the Warsaw office market. According to observed trends, client relocations from neighbouring office zones and subzones to the region of Rondo Daszyńskiego continue to be significant. These are demonstrated by the largest transaction in Q3 2024. Santander Bank will relocate from the Central Business District zone to The Bridge building in the Centre-West zone, occupying a 24,500 sqm space under a pre-let agreement. Axi Immo represented a customer that relocated from Mokotów-Służewiec to a new office space near Rondo Daszyńskiego, measuring roughly 1,300 sqm.
Bartosz Oleksak, associate director, Office Department, Axi Immo

Rental rates stabilisation

At the end of Q3 2024, offer rentals in Warsaw's most renowned, centrally situated office buildings varied between EUR 19.00 and EUR 27.00/sqm/month, with some schemes reaching EUR 30.00/sqm/month or more. In non-central districts, offer rentals began at EUR 10.00 per sqm monthly.

Changing tenant preferences

We are witnessing a trend towards lengthening the duration of new leases, with 7-year leases becoming more common. Following the pandemic, corporations are attempting to maximise their office space by shifting to more desirable locations and altering workplaces to satisfy the demands of employees in a hybrid model. The minimal cost of completing the shell and core space stays about EUR 800-900 per sqm. In addition, the capital's office sector is experiencing the repositioning and refitting of older B-class office buildings and the conversion of purpose to residential. Many instances of this can be seen today in the Służewiec district, among others. Another tendency is the destruction of older office buildings to use the available land to develop contemporary office structures that meet current market criteria. Replacing the destroyed Atrium International office building with the newly planned Upper One project is one example of such a procedure in which the office function will be maintained. The new buildings continue the ESG trend by providing additional green space and community amenities. Office buildings are also implementing various technological innovations to save energy expenditures.
Jakub Potocki, associate director, Office Department, Axi Immo