The devil is in the details
In the face of stiffening competition and changes in the preferences of tenants, new office developments should be planned very carefully already at the design stage – this is how, in a nutshell, we can sum up the most important findings from the lively discussions that took place during the 8th edition of the conference “Office Buildings in Poland”, organized by Nowy Adres S.A.
In the past eight years, the conferences from the series „Office Buildings in Poland” have found a permanent place in the calendar of events for the office property market as the largest and most prestigious meetings for this industry. This year’s edition, which took place on 21-22 October at Warsaw’s Hilton Hotel, was attended by nearly 260 people – developers, representatives of consultancies, banks, managers, tenants and architects. As usual, the conference participants could use the unique Match Maker program, which allows you to arrange a business meeting with any other person attending the event. During both the conference days, more than 400 meetings were arranged using Match Maker!
An unexpected change of roles
The conference kicked off with a discussion panel moderated by Radosław Górecki, communication manager at consultancy Colliers. Its participants, including Rafał Mazurczak, director of the office and hotel department at Echo Investment, Arkadiusz Rudzki, leasing and asset management director at Skanska Property Poland, and Jarosław Zagórski, commercial and business development director at Ghelamco, discussed the current situation in the office market in the capital and the regional cities. While in cities like Kraków, Wrocław, the Tri-City, Poznań, or even Katowice, office rentals are strong thanks to the continuing popularity of these cities as investment locations for the BPO (Business Process Outsourcing) sector, Warsaw is facing a possible oversupply crisis. If all the projects underway or in the pipeline are completed as planned, in 2017 we could see a vacancy rate of as much as 19 percent in the capital, which will translate into nearly a million square meters of available, vacant offices. In comparison, the vacancy rate may be about 8 percent in the regional markets. The panel participants agreed that those to suffer most will be the owners of older facilities built in the previous century, Class B or lower, who will find it difficult to keep the existing tenants. That’s because, taking advantage of the declining rental rates, they will be able to rent modern, high-standard office space in new projects.
Good fit is the key
There was also great interest in a lecture by the special guest of the conference, Fokke Moerel, an architect working for the famous yet controversial Dutch MVDRV studio. In her view, the key to success for an office building is to skillfully blend the project with the environment and to harmoniously embed it into the existing urban fabric. This philosophy will be soon on display in Poznań – MVDRV is responsible for the design of the Baltic office building, which will offer 25,000 sqm of new offices after its completion next year. The facility will stand out with “chops” and gaps in the body of the building, which are characteristic for the studio and can be seen in projects like the “Tower with Waist” in Vienna or the headquarters of the DNB bank in Oslo.
To make the Y generation feel good
The special guest of the second day of the conference – Peter Victor, Senior Managing Director, Head of International Desk, EMEA at global consultancy Cushman&Wakefield, focused on the changes brought to the office market as the so-called Y generation enters the labor market, for whom it is increasingly of secondary importance to locate offices in city centers, which are regarded as prestigious. – In Western European countries, developers increasingly have to “scramble for talents” and offer added values in the form of special amenities and custom organization of work and office space to the best and most qualified young generation workers. Location in office centers in itself is no longer a decisive factor for a large group of workers – said Victor, citing examples of new, large office developments in London.
Demand to hold steady?
What will be the demand for office spaces in the near future? Mateusz Polkowski, director of the Research and Consulting Department at consultancy JLL, tried to answer this question. In his opinion, demand for offices will hold steady both in the Warsaw market and the regional cities. While in all of 2014 the total demand for offices was 1,050,000 sqm, in the first three quarters of the current year that number was already topped by 30,000 sqm. Overall, 1,194 lease agreements were concluded last year, 12 of them for more than 10,000 sqm. From January to the end of September 2015, the numbers were 1,070 and 17 respectively. The high demand for offices in the Warsaw market will be driven by declining rental rates, resulting from large supply in new projects. The regional cities will continue to take advantage of Poland’s huge popularity as an investment location for the BPO sector – JLL estimates that 250,000 people will work in the industry by 2020. In comparison, about 190,000 people are employed in the automotive sector all over Poland.
About the organizer:
Nowy Adres S.A. is a provider of professional tools for the residential and commercial real estate market. The company’s flagship products include the Residential Property Fairs, organized in Warsaw, the Tri-City, Wrocław, Kraków and Poznań. The real estate portal mieszkaniowi.pl contains the latest and most detailed information about the Polish residential market. Nowy Adres is also the creator of Poland’s largest research project for the real estate market, “The Polish Residential Market – Demand and preferences of buyers”. The company’s portfolio also includes well-established series of industry conferences: “The Polish Real Estate Forum”, “The Polish Residential Market” and “Office Buildings in Poland”, a series of albums under the same title, and numerous catalogues of residential projects.