Occupier sentiment is showing signs of gradual improvement on the Warsaw office market. According to “Office Occupier: Office Market in Warsaw”, a report published by real estate advisory firm Cresa Poland, office take-up hit 160,400 sqm in Q4 2020, down by 15% on the same period in 2019. Total leasing activity for 2020 amounted to 602,000 sqm, which accounts for 73% of the annual average for 2015-2019.
At the end of 2020, Warsaw’s office stock climbed to 5.9 million sqm, which represented a 5.8% increase year-on-year. Three office buildings with a combined area of 75,800 sqm were delivered to the market in the last quarter of the year. The office completions included Golub GetHouse’s Mennica Legacy Tower (47,900 sqm) and Yareal’s Lixa A and B (22,100 sqm and 5,800 sqm, respectively). 2020’s new supply rose by 94% over the previous year’s figure.
In 2020, total leasing activity amounted to 602,000 sqm, down by 31% on the previous year. The fourth quarter alone saw 160,400 sqm transacted. Last year new leases and renegotiations accounted for most of the transaction volume at 54% and 37%, respectively. Expansions made up just 9% of total office take-up. In the last quarter, new leases accounted for 44%, followed by renegotiations (43%) and expansions (13%).
In Q4 2020, occupier activity focused on the Centre and Jerozolimskie Corridor, which accounted for 46% and 16% of the total transaction volume, respectively. Leases signed in central zones made up 55% of all deals compared to 45% in non-central locations.
The largest lease in 2020 was the pre-let agreement signed in Generation Park Y by PZU (46,500 sqm). It was followed by a new transaction by DSV in DSV HQ (20,000 sqm). Poczta Polska extended its lease and expanded to 19,000 sqm at Domaniewska Office Hub. Other transactions similar in size included: a renegotiation of 17,500 sqm at Konstruktorska Business Center by confidential tenant and the lease agreement signed by Allegro at the Norblin Factory (16,200 sqm).
“Absorption hit 51,500 sqm in October-December, representing a 16% decrease on the same time last year. Total absorption for 2020 amounted to 165,600 sqm, down by 15% year-on-year. The vacancy rate stood at 9.9% at the end of Q4 2020, up by 2.2 pp on the same period last year and up by 0.3 pp compared with the third quarter,” says Iga Kraśniewska, Research Manager at Cresa Poland.
Asking rents stand at EUR 11,0-15,5 sqm/month in Służewiec, EUR 12,0-15,0 in Jerozolimskie Avenue, EUR 17,0-22,7 in City Centre West and at EUR 17,0-24,0 sqm/month in the Central Business District.
