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Warsaw Office Market Profile Q1 2013
Strong construction activity pushes
up vacancy rate further despite
sustained demand.
Office demand in Warsaw continues its strong pace with
98,700 m² net demand (excl. renewals) and 155,500 m² gross
demand registered during the first quarter of 2013; increases of
Q1
2013
Q-o-Q
change
Y-o-Y
change
12 Month
Outlook
Gross Take-up (m²)
155,500
+2,300
+30,500
Net Take-up (m²)
98,700
-19,000
+13,800
Vacancy Rate (%)
9.9
+1.1 pp
+2.6 pp

 

 


Completions (m2)
76,200
-44,000
+28,400

Under Construction (m²)
576,000
0
-6,000
Prime Rent
22-24.5
-2%
-2%
6.25
0 bp
0 bp
Summary Statistics
(€/m2/month)
Prime Yield (%)








16% and 24% respectively year on year and keeping up with the
strong Q4 2012 level. The pre-letting activity remains strong,
representing some 30% of the net demand during the first
quarter. The largest new transactions during Q1 2013 were prelets/pre-sales including the owner occupation transaction by
Konsalnet (8,200 m²) and the pre-letting by Schneider (7,000m²)
in Park Rozwoju in Mokotów. The largest renewals - both in
Office Completion, Future Supply and Vacancy Rate
400.000
16,0%
300.000
12,0%
200.000
8,0%
100.000
4,0%
Mokotow - were registered by BNP Paribas with 11,000 m² in
0
0,0%
2005 2006 2007 2008 2009 2010 2011 2012
Trinity Park II and by Play with 9,600 m² in Marynarska BP of
Q1 2014f
2013
which the latter also included an expansion of its occupied space.
The total volume of new completions is forecasted to peak in
Completions (m²)
Future Compl. Non-Spec (m²)
Future Compl. Spec (m²)
Vacancy Rate (% ) (RHS)
2013 with a total of 308,000 m² of which almost half is expected
to be completed in US (Mokotów) followed by SW with 30% of
the total volume. In Q1, 72,600 m² was completed and future
completions for Q2-Q4 2013 (238,000 m²) are predominantly on
Office Demand
600.000
500.000
a non-speculative basis. A decrease in completion is expected in
400.000
2014 totalling 230,000 m². Developers’ activity is slightly
300.000
decreasing year on year but remains at the relatively high level of
200.000
100.000
576,000 m² under construction.
0
2005
The high construction activity pushed vacancy up further to 9.9%
2006
2007
2008
2009
Net Take-up (m²)
at the end of Q1 2013 of which 9.6% in Central and 10.0% in
2010
2011
2012
Q1
2013
Renewals (m²)
Non-Central districts. We expect the vacancy rate to keep an
upward trend during 2013, despite the sustained demand. The
high level of pre-lettings driven by search for quality combined
Prime Headline Rents
with attractive rental conditions will increase vacancy in second
30
hand buildings.
25
The high vacancy rate puts rents under a downward pressure.
Prime headline have been revised slightly downward over the
quarter in the Central districts to € 22.0-24.5 /m²/month. The best
Non-Central locations, such as prime buildings in Mokotów, are
fetching €15.0 /m²/month. Rental conditions are becoming more
favourable for tenants.
20
15
10
2005
2006
2007
2008
2009
Central (EUR/m²/month)
Source for all charts: Jones Lang LaSalle, WRF
2010
2011
2012
2013f
Non-Central (EUR/m²/month)
Office Market Profile Poland Q1 2013
The majority of recently commenced projects can be found in
Kraków, Tri-City, Wrocław and Poznań.
High construction activity puts
upward pressure on vacancy, while
take-up and rents remains stable.
As of the end of Q1 2013, quarterly vacancy rates remained
stable in Katowice, Kraków and Wrocław, whilst slight decrease
was seen in Łodź (averaging 11.7% vs. 13.7% in Q4 2012).
Other major office markets in Poland** have recorded an
increase in vacancy levels. Due to the relatively extensive
completions expected in Q2-Q4 2013, vacancy rates may
increase in some markets.
Almost 100,000 m2 was leased in major office markets in Poland
(excluding Warsaw) in Q1 2013, up 7% compared to last quarter
(the net take-up of 79,300 m2 was up by 3% compared to
Q4 2012), with Kraków, Wrocław and Katowice clearly leading in
occupier activity. Almost 40% of all deals signed in Q1 2013
consisted of pre-lets. The largest pre-let deals in Q1 included
a ca. 12,000 m2 deal by Getin Holding in Sky Tower (Wrocław),
Polski Koks taking 6,150 m2 in Polski Koks HQ (Katowice),
confidential client signing for 6,000 m2 in LC Corp Tower
(Katowice), 4,700 m2 deal by Brown Brothers Harriman in Orange
Office Park – Amsterdam (Kraków) and Netia taking 3,500 m2 in
West House 1B phase I (Wrocław). Other major deals signed last
quarter are: Google (renewal and expansion for 3,650 m2 in
Rynek 12/13, Wrocław), Pekao SA (a new deal for 2,900 m2 in Bit
Komputer, Kraków), Geoban (renewal and expansion for 2,800
m2 in Łużycka Office Center, Tri-City) and UBS (new deal for
2,750 m2 in Green Office C, Kraków).
Stock and Vacancy Rate
2
m
Vacancy Rate (RHS)
500.000
%
25
20
19.7
16.7
400.000
13.7
300.000
15
11.7
10.0
9.7
200.000
10
2.6 5
4.2
100.000
Lu
bli
n
cz
ec
in
Sz
Łó
dź
Po
zn
ań
Ka
tow
ice
Tr
i-C
ity
0
Kr
ak
ów
W
ro
cła
w
0
Prime headline rents currently range from €11 to €13 / m2 /
month in Łódź up to €16 / m2 / month in Poznań. We estimate
some markets may see slight downward rental pressures in Q2Q4 2013.
Q1 2013 brought 98,000 m2 of new office space to the market
outside Warsaw, of which 40% was in Wrocław (inter alia,
28,500 m2 in Sky Tower and 10,700 m2 in Green Towers B) and
32% in Tri-City (two office building within the Olivia Business
Centre – Olivia Tower, 14,240 m2 and Olivia Point, 9,600 m2).
Other new major additions to the market include Baltic Business
Park (9,870 m2) and Piastów Office Center A (7,000 m2) both in
Szczecin. Interestingly, Wrocław joined Kraków in terms of
modern office stock exceeding 500,000 m2.
Prime Headline Rents (€ / m2 / month)
Poznań
Wrocław
Kraków
Tri-City
Katowice
Szczecin
Łódź
Currently around 427,800 m2 of office space remains under
active construction in the major Polish cities,*** of which
71,100 m2 is likely to be completed in Q2 2013 (60% of which is
already secured with pre-let agreements).
Q1 2013
Stock (LHS)
600.000
Lublin
10
11
12
13
14
15
16
17
Source all charts: Jones Lang LaSalle ; ** excluding Warsaw
*** Kraków, Wrocław, Tri-City, Katowice, Poznań, Łódź, Szczecin and Lublin
Warsaw
Kraków
Wrocław
Tri-City
Total Stock (m2)
3,935,250
551,400
501,900
409,150
296,100
292,950
248,800
108,800
90,500
Completions (m2)
76,200
1,800
39,200
31,600
6,150
2,400
0
16,900
0
Under Construction (m2)
576,000
96,700
67,450
80,800
40,450
66,800
45,100
11,500
19,000
11.7%
19.7% 
Vacancy Rate (%)
9.9% 
4.2%  9.7% 13.7% 


* The arrows indicate the quarter-on-quarter changes in vacancy level
 Q1.
between Q4 and
Contacts:
Tomasz Czuba
Head of Office Leasing,
Poland, Warsaw
+48 (0) 22 318 0198
[email protected]
Mateusz Polkowski
Senior Research Analyst,
Poland, Warsaw
+48 (0) 22 318 0042
[email protected]
Katowice Poznań
10.0% 16.7% 


Agnieszka Sosnowska
Research Analyst,
Poland, Warsaw
+48 (0) 22 318 0056
[email protected]
Łódź Szczecin
Lublin
2.6% 

