The time is now
"I believe we will see a number of traditional city center occupiers who moved out of town due to costs returning to the city center."
Experts believe that there could not be a better time for companies to move, as great quality comes for a great price.
Just a few years ago the real-estate industry in Warsaw witnessed an exodus of companies from a variety of sectors to the city's suburbs. The reason- increasingly higher rents. For the same charge, companies could essentially lease more space. This drive has lead to the creation of two distinct markets in Warsaw-city center and non-central location.
"The developers were very aggressive with rents and this led to the fact that now we have a 19 percent vacancy in the city center and a five percent vacancy in Mokotów," said managing director of Colliers Poland, Hadley Dean. "Mokotów has become almost a little city center within Warsaw and a quarter of the total office stock is there."
But apart from the fierce competition between developers in Warsaw, there is also the issue of why occupiers would normally locate in the city center.
"The prime reasons are ease of access by public transport and amenities such as retail and leisure," said Bannatyne. "At the moment this does not exist in Warsaw, although it is improving and the city center is becoming more defined and being helped by projects such as Złote Tarasy. Therefore a number of occupiers that would normally locate within the city center have historically chosen locations such as Mokotów which is easily accessible, and has parking and amenities such as Galeria Mokotów."
The non-central market is performing so well, experts foresee that certain locations will actually witness some rental growth.
"If the growth will not be in headline rents themselves, at least there will be a reduction in incentives being offered and thus an increase in the effective rent," said Bannatyne. "We could witness the situation this year whereby some non-central locations are more expensive than the city center."
This shift in tenants' focus has created a trend where the Warsaw city center is essentially a tenants' market. Even though headline rents range from 16 to 18 per sqm, landlords have been increasingly flexible in terms of offering significant incentives that lead to lowering the effective rents. Experts predict this favorable situation will actually bring a lot of tenants, such as high-tech and telecoms companies, back into more central buildings.
"What is happening now is that a lot of the leases are coming up for renewal and these companies have looked at the market and see that the city centre is only five percent more expensive than the suburbs," said Hadley Dean. "You can get amazing deals in the centre now, even below 14 effective rents while in the suburban market you're looking at E11 so the difference is minimal."
Does that mean the good times are back for landlords? All indicators seem to be pointing this way, as leases will soon be renegotiated and increasing numbers of companies are considering moving back into the center. "Tenants will always relocate if they can move to a new building for the same price," said Dean. "The coming year, and 2006 especially, will be a very good time for the landlords. It'll be very interesting to see exactly how quickly the market will come back to the landlords' side."
Experts believe that there could not be a better time for companies to move, as great quality comes for a great price.
Just a few years ago the real-estate industry in Warsaw witnessed an exodus of companies from a variety of sectors to the city's suburbs. The reason- increasingly higher rents. For the same charge, companies could essentially lease more space. This drive has lead to the creation of two distinct markets in Warsaw-city center and non-central location.
"The developers were very aggressive with rents and this led to the fact that now we have a 19 percent vacancy in the city center and a five percent vacancy in Mokotów," said managing director of Colliers Poland, Hadley Dean. "Mokotów has become almost a little city center within Warsaw and a quarter of the total office stock is there."
But apart from the fierce competition between developers in Warsaw, there is also the issue of why occupiers would normally locate in the city center.
"The prime reasons are ease of access by public transport and amenities such as retail and leisure," said Bannatyne. "At the moment this does not exist in Warsaw, although it is improving and the city center is becoming more defined and being helped by projects such as Złote Tarasy. Therefore a number of occupiers that would normally locate within the city center have historically chosen locations such as Mokotów which is easily accessible, and has parking and amenities such as Galeria Mokotów."
The non-central market is performing so well, experts foresee that certain locations will actually witness some rental growth.
"If the growth will not be in headline rents themselves, at least there will be a reduction in incentives being offered and thus an increase in the effective rent," said Bannatyne. "We could witness the situation this year whereby some non-central locations are more expensive than the city center."
This shift in tenants' focus has created a trend where the Warsaw city center is essentially a tenants' market. Even though headline rents range from 16 to 18 per sqm, landlords have been increasingly flexible in terms of offering significant incentives that lead to lowering the effective rents. Experts predict this favorable situation will actually bring a lot of tenants, such as high-tech and telecoms companies, back into more central buildings.
"What is happening now is that a lot of the leases are coming up for renewal and these companies have looked at the market and see that the city centre is only five percent more expensive than the suburbs," said Hadley Dean. "You can get amazing deals in the centre now, even below 14 effective rents while in the suburban market you're looking at E11 so the difference is minimal."
Does that mean the good times are back for landlords? All indicators seem to be pointing this way, as leases will soon be renegotiated and increasing numbers of companies are considering moving back into the center. "Tenants will always relocate if they can move to a new building for the same price," said Dean. "The coming year, and 2006 especially, will be a very good time for the landlords. It'll be very interesting to see exactly how quickly the market will come back to the landlords' side."
