Summary of the first quarter of Warsaw office market

"Last year everyone was a bit afraid of what will happen on the Warsaw office market terms of lease volumes. But the 2015 results have positively surprised all the market participants: tenants, advisors and developers, while the vacancy rate dropped," said Tomasz Buras, managing director, Savills Polska.
As Tomasz Buras told us, in 2016 the supply number will reach and overpass its historic peaks. "Some 280,000 sqm of office space was delivered to the Warsaw market in 2015. This year the number will hit 480,000 sqm, and in 2017 - 390,000 sqm. So the market is on the rise right now. This means we can expect a higher vacancy rate, of around 16 pct, by the end of 2016. On the positive note: a lot of big scale office buildings will be delivered this year. They are either fully leased or to almost fully leased and include Warsaw Spire, Q22, Atrium 2. The latest phase of Gdański Business Center is also really popular among tenants. So we are much less worried about the new office supply. For the market, the vacancy rate in older buildings is much more worrying. Tenants who move to new buildings leave older offices, app. 12 - 15 year old, and these properties will significantly feel the change," he added.

"I see two approaches the older buildings could take. Those which are still in a good shape and attractively-located, with no additional space left out on the plot they are taking, they should invest in new technologies, the improvement of common spaces and the modernization of a part of their installations. Once updated, such office project could be brought back to the market. The second scenario, for those buildings which are located on the plots with further development potential, it would be best to build something else there or change the character of the building, or both. A part of older office buildings can be successfully re-modelled and transformed into hotels or apartments. They can of course also be demolished so that something bigger could be built on the spot they are taking," said managing director, Savills Polska.