Poland’s wider economic growth has been weak, but the agent’s new report shows that demand remained strong in the first half of 2013, with healthy take-up figures placing Warsaw on track for a strong level of annual take-up.
Take-up totalled 334,000 sq m in H1 2013, 12 per cent higher than the same period in 2012. Renegotiations and renewals remained a major driver, accounting for almost one-third of occupier activity, although some large deals have also been recorded. The biggest lease saw The Office of Registration of Medicinal Products take up 13,000 sq m of space at Ochota Office Park, south of Warsaw’s Central Business District.
“While occupier demand remained healthy, the high levels of development activity in Warsaw have become a cause for concern,” notes Knight Frank. “H1 2013 saw more than 150,000 sq m of new space completed in Warsaw, with c.180,000 sq m of largely speculative space expected to be delivered over the second half of the year. By end of 2014, more than 400,000 sq m of new office space is expected to be completed.”
This increased development activity pushed up vacancy rates during the first half of the year, except for Wola, while overall vacancy rate increased significantly from 10.8 per cent at the end of 2012 to 12.4 per cent in June 2013.
“Vacancy rates may face additional upward pressure in H2 due to the large amount of space in the pipeline,” predicts Knight Frank.
Despite this, though, rents have remained stable. Prime space lets for around €24.50 per sq m per month and offices in non-central locations fetching between €13-17 per sq m per month.
“Future rental growth is expected to be constrained by the growing availability of space, and landlords may need to offer increased rental incentives in order to attract tenants,” continues Knight Frank.
The investment market in Poland was relatively subdued in the first half of 2013, with commercial property transaction volumes totalling €1.05 billion. But with positive sentiment, buyers continue to be active, particularly those from America and Germany.