Nearly 600,000 sqm of office space under development in Warsaw - JLL

Over 1.1 million of office space is currently under construction across Poland, with 579,000 sqm of that space located in Warsaw, a recent JLL report said. Apart from the new stock in the pipeline, Warsaw also has 62,000 sqm of office space under refurbishment. “Remodeled and renovated buildings account for around 10 percent of the developed office space in Poland’s capital city. We think that the trend of older buildings being refurbished and tailored to market needs and expectations will continue,” said Mateusz Polkowski, associate director of Research and Consultancy at JLL. “In 2014, a total of ca 350,000 sq m of new offices will be completed, including the above- mentioned refurbishments,” he added. In H1, 190,300 sqm of office space was delivered to the capital’s market, some 106,000 sqm of which was completed in Q2. The largest office completions in Q2 were Eurocentrum Office Complex I (38,700 sqm), GreenWings (10,800 sqm) and Gdański Business Center 1-A (29,600 sqm). Warsaw currently has some 4.2 million sqm of office space. The non-central stock has recently crossed the 3 million sqm threshold. The market is expected to maintain its current pace of development over the next two years, with some 300,000 sqm of new stock being added to the market in 2015 and 2016 each, hitting the 5 million sqm mark in 2016. “The volume of new office projects will be reflected in the continued upward pressure on the vacancy rates,” Polkowski added. Vacancy rates have increased over the first six months of 2014 from 11.8 percent at the end of 2013 to 13.4 percent in June (13.6 percent in central Warsaw and 13.3 percent in non-central locations). Prime headline rents range between range between €22 and €24 per sqm per month in the center and €14.5-€14.75 per sqm per month in non-central locations. “In H1, tenant demand in Warsaw stood at 258,900 sq m, of which 129,500 sq m was accounted for by transactions concluded in Q2,” the report said. By Agata Słowińska