The development of the Polish market in respect of modern office space is very diversified. Warsaw clearly occupies the dominant position in terms of market maturity, and outdistances the other large cities. Since the mid 90s, the Warsaw market has gone through almost an entire life cycle, and is currently returning to the growth phase. The lack of modern office space at the start of the 90s, on the one hand, brought an increase in market rent, even up to USD 50/m2, and, on the other hand, encouraged developers to commence a significant number of new projects. In such a situation, at the start of the 21st century we witnessed an oversupply of office space offered at rent rates exceeding market means. Investors’ willingness to reduce rents was minimal due to the need to meet budgeted business plans which frequently constituted the guarantee for receiving external financing for the projects. Such stagnation on the rental market continued until 2005. Today, the market is returning to a condition in which the level of unoccupied office space allows for healthy market competition to be maintained and the rents enable investors to achieve reasonable rates of return.
Rents
The Centre of Warsaw still outdistances other Polish cities, with rents in prime locations being at EUR 20-24/m2. Outside the centre, the asking rents drop to EUR 12-16/m2. Analysts assume that transaction rents in the city centre will be maintained at an unchanged level, accompanied by a slight increase in the effective rates (increased demand enables reduction in tenant incentives).
Among the regional cities, the highest rents are noted in Kraków with rents ranging from EUR 15 to 16/m2 for newly built facilities and older properties which have been modernized. This often results from the fact that many firms choose Kraków as a location for their Shared Service Centres. Apart from the competitive rents and relatively low employment costs of qualified staff, the convenient location of Kraków and its easy access to the airport are of considerable importance. Rents in the remaining cities like Poznań, Katowice, the Tri-City (Gdańsk, Gdynia, Sopot), Wrocław, are at a level of EUR 10 to 15 /m2.
Vacancy
In 2006, there was a further increase in occupied office space, but it was not as dramatic as in previous years. On the Warsaw office market, the vacancy level in 2006 was close to the level achieved at the end of the 90s, just before the dramatic growth phase. In the city centre, the vacancy level was 11.5%, whereas outside the centre it was only 5.5%. The relatively high vacancy level in the City Centre results largely from the considerably high rental rates and the increased recent supply (e.g. Rondo 1 and Prosta Office Center). However, it is anticipated that the next two years may bring an increase of vacancy outside the immediate city centre because the majority of the planned supply of new office space (almost 650,000m2) is to be developed in that area.
A very low vacancy level at less than 5% is also noted in Kraków. Due to the fact that currently in the capital city of the Małopolska Region only several office buildings have been developed and tenant demand has not diminished, it is expected that in the near term the vacancy rate will decrease even more.
The same trend is observed in Wrocław, where the vacancy rate is also about 5%.
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Selected new office space supply
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Property
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Area
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Completion
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Developer/Investor
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Warszawa
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Blue Office Two
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14 000
|
2008
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Blue City
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Equator Office
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13 300
|
2008
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Immoeast/ Karimpol Polska
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Grzybowska Park
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9 800
|
2008
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AIG Lincoln
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Headquater of Poczta Polska
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30 700
|
2008
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PPUP Poczta Polska
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|
Horizon Plaza
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35 000
|
2008
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Curtis Group
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Jutrzenki Business Park II
|
2 700
|
2008
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E&L Real Estates
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Lipowy Office Park
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38 400
|
2008
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Hochtief Project Development Polska
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Marynarska Business Park
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43 000
|
2008
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Ghelamco Poland
|
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Marynarska Point
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25 000
|
2008
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Skanska Property Poland
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N/A
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7 600
|
2008
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Canal+
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Nefryt
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15 200
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2008
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Globe Trade Centre
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North Gate (formerly Belveder Centrum)
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28 000
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2008
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GVA Immoconsult Polska
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Okęcie Business Park (Nothus)
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61 000
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2008
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Globe Trade Centre
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Platinium Business Park
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45 000
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2008
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GTC Satellite
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Tulipan House
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18 000
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2008
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Slough Estates Polska
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Adgar Plaza
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25 100
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2009
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Adgar Postępu
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Al. Jerozolimskie 61/63
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3 100
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2009
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Reinhold Polska
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Atrium City
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18 500
|
2009
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Skanska Property Poland
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BTD Office Center
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6 800
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2009
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BTC - Invest
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Mokotów Plaza
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17 000
|
2009
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Celtic Asset Management
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Park Postępu
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34 000
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2009
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Echo Investment
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Poleczki Business Park
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24 000
|
2009
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CA Immo International / UBM
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Radwar Business Park
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11 500
|
2009
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Radwar
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Rondo
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20 000
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2009
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S+B CEE/Immoeast
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Trinity Park Phase III
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32 000
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2009
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Ghelamco Poland
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Wolf Marszałkowska
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11 100
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2009
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Wolf Immobilien Polen
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|
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Wrocław
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DTC Renoma
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10 000
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2008
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DTC Renoma
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Globis
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14 500
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2008
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Globe Trade Centre
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Karkonoska
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36 000
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2008-2009
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Globe Trade Centre
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Grunwaldzki Center
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23 600
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2008
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Skanska
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Bema Plaza
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22 000
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2008
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Ghelamco
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|
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Kraków
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Edison
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10 300
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2008
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Globe Trade Centre
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Centrum Biurowe Kazimierz
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14 700
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2008
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Globe Trade Centre
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M65 Meduza
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4 000
|
2008
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GD&K Group
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|
|
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Poznań
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|
Nowe Garbary
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7 000
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2008
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Regional Polska
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Malta Office Park
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28 100
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2008-2010
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Echo Investment
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Omega
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7 450
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2008
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Ataner
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Szyperska
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17 000
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2009
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Wechta
|
Source: PricewaterhouseCoopers
Market trends
In connection with the dynamic market development, we are observing the following trends:
- The growing interest in Poland as a location for Outsourcing Centres. These investments not only involve renting out large amounts of office space (most often, developed on the demand of a specific client) but also offer employment opportunities and guarantee the import of new organizational technologies to Poland;
- The construction of modern multifunctional facilities, comprising shopping and recreational areas as well as hotels and offices (e.g. Złote Tarasy in Warsaw, Manufaktura in Łódź, Stary Browar in Poznań). Increasingly these multifunctional facilities are developed in historic industrial buildings adapted to the new functions. Such offices, fully modern in terms of the finishing technology, and on the other hand, “embellished” with interesting architecture offer an additional incentive to tenants;
- The increased popularity of new forms of office space use, accompanied by the effective utilization of own resources, based on sale and lease back agreements.
