Knight Frank has ideas for older office buildings

The Knight Frank team of experts has developed 11 scenarios for older office buildings, which were completed before 2005. According to the company’s data, at the end of H1 2019 such buildings accounted for nearly 30% of the combined office stock (over 10.3 million sqm) in the seven biggest office markets in Poland: Warsaw, Kraków, Wrocław, the Tri-City, Poz-nań, Katowice, and Łódź.

One of the scenarios considered when the profitability of a building is falling is to increase the building intensity. Good financial results of the industry and a stable economic situation help to make investment decisions consisting in the purchase of attractive plots of developed land and the implementation of much larger projects on them, said Krzysztof Cipiur, director, capital markets, at Knight Frank. He noted that an example of such an approach is Skanska’s planned demolition of the Ilmet building at Rondo ONZ in downtown Warsaw, which will be replaced with an almost three times larger building.

Over the past five years, the office stock in the largest markets in Poland has grown by almost 4 million sqm. As years go by, architecture also changes and more attention is paid to the use of high-quality building materials. Some of the buildings constructed several years ago have a relatively high ratio of common areas and consume more water and energy than newer buildings due to the older technologies used in them. For a tenant, this translates into higher office maintenance costs, and operating costs only increased by over 10% over the past 2-3 years. Also, technologies that were widely used a few years ago are less ecological and sustainability is currently one of the key aspects taken into account when choosing an office.
(WBJ)