The H1 data indicate that the worst-case scenarios regarding the effects of the COVID-19 pandemic on the Warsaw office market did not materialize. According to “Occupier Economics: Office Market in Warsaw in H1 2020”, a report published by real estate advisory firm Cresa Poland, the second quarter witnessed a substantial volume of new supply which has now been almost fully absorbed by the market. A total of 100,000 sqm was delivered in Warsaw with additional 700,000 sqm currently under construction.
Warsaw’s office stock totals 5.69 million sqm, up by approximately 2.6% year-on-year. In the second quarter of 2020, four office buildings were completed: Varso II (39,900 sqm, HB Reavis), Chmielna 89 (25,200 sqm, Cavatina), Browary Warszawskie Biura przy Willi (14,900 sqm, Echo Investment) and DSV HQ (20,000 sqm, FinTech Construction).
Leasing activity amounted to more than 334,800 sqm in H1 2020. In Q2 2020 demand amounted to 195.900 sqm, down by 11% on the average of the previous four quarters. New leases accounted for 67% of the leasing volume (including pre-let agreements), while renegotiations and expansions made up 29% and 4% of all deals, respectively.
The largest lease in the second quarter of 2020 and at the same time in the history of the office market in Poland was the pre-let agreement signed in Generation Park Y by PZU (46,500 sqm). It was followed by a new deal by DSV in DSV HQ (20,000 sqm). Poczta Polska renegotiated and extended its space to 19.000 sqm at Domaniewska Office Hub.
At the end of H1 2020, the city’s vacancy rate stood at 7.9%, equating to 448,200 sqm of unoccupied space, down by 0.6 pp on the same quarter of 2019. By comparison, the vacancy rate averaged approximately 8% in the last four quarters.
Office absorption hit 93,700 sqm in H1 2020 as tenants had vacated space in several buildings following the decisions to relocate to new premises and due to a high level of new supply.
Asking rents stand at EUR 11-13 in the east of Warsaw, EUR 11-14/sqm/month in Służewiec, EUR 12.5-16 in Jerozolimskie Avenue, EUR 16-20 in Nowa Wola, and at EUR 19-23/sqm/month in the Central Business District.
