Low vacancies

The availability of modern office space in Warsaw decreased in Q1 2008 to reach 2.4 percent at the end of the quarter, according to the Office Market Update Warsaw Q1 2008 report by real estate consultancy DTZ. According to Warsaw Research Forum, this figure is a record low.

The drop was mainly felt in non-central locations where the vacancy rate fell from 2.9 to 1.7 percent over the quarter. DTZ analysts predict that the shortage of space will be partially alleviated within the next two years, since a number of new projects should be delivered to the market.

"Whereas the availability in central locations is likely to remain relatively stable or slightly decrease, the vacancy outside the city center may go up. This trend will result from a large pipeline supply located mainly in the Upper South subzone," said the report.

Almost 70,000 sqm of new office space was delivered to the market in the first quarter of the year, with the biggest new projects including Marynarska Business Park and Harmony Office Center. Altogether, 300,000 sqm of space is expected to be completed in 2008, the bulk of which will be located outside the city center.

Rent levels in central locations recorded a 25-percent y/y increase in Q1 2008, in the range of Euro 30-33 (zł.101.4-111.5) per sqm per month. These are expected to grow further over the next few years because of the low level of new office space. Rents in prime non-central office projects remained stable, with the average ranging from Euro 14-15 (zł.47.3-50.7) per sqm per month.