According to CBRE's report 'Warsaw Office Market View H1 2012' the demand for modern office space remains strong. The leasing activity in H1 2012 totaled 298,000 m², slightly less than in the corresponding period last year.
By the end of H1 2012 modern office stock reached almost 3.7 million m², of which 33% is located in the City Centre. Recently completed projects are located mostly in the City Center, Upper South and Lower South zones. The largest project of H1 2012 was the second phase of Poleczki Business Park (21,000 m²). Significant schemes delivered in Q2 2012 include Platinium Business Park V and Ufficio Primo.
"Due to the depreciation of the PLN against the EUR and the recovery in supply, tenants are being put under a greater rental pressure. Therefore, rents might increase only in the Central Business District, where the supply is relatively limited", said Joanna Mroczek, Head of Consultancy & Research, CBRE Poland.
In response to an upswing of demand, observed especially in pre-let transactions, the amount of modern office space under construction has increased. Currently, it amounts to 700,000 m², which is some 20% of the existing stock. Over 50% of the constructed office space in Warsaw is generated by eight biggest schemes.
The growing amount of office space under construction might exert a negative pressure on the average rental level and a further growth of vacancy rate in the long term, as 70% of office space in Warsaw is being constructed on the speculative basis.
In H12012, the largest deal was a pre-let transaction signed by PTC in T-Mobile Office Park (27,000 m²), followed by ING Group's pre-let in Plac Unii (12,100 m²) and Axel Springer's renegotiation (9,100 m²) in Trinity Park I.
The overall Warsaw office vacancy rate amounts to 7.4%. The majority of the available space is located in the Upper South zone (around 65,000 m²) and in the fringes of the City Center (around 62,000 m²). The Northern zones till suffers from under supply.
The vacancy rate is expected to retain the growing trend throughout 2012 and 2013, as the number of speculative projects being delivered to the market increases. However, the best office space, located in the most attractive areas, is being quickly absorbed.
Prime headline rents are estimated at 2627/m²/month in the CBD. In non-central locations, the headline rents for the best projects have been relatively stable for a number of years and a mount to EUR1516/m²/month.
The prime office yields are estimated at 6.25% and are expected to remain stable in the near future. Yields for secondary office schemes are under upward pressure. Investors' interest in office products deteriorated in the first half of the year.
2012 saw only five office transactions so far with a total value of 140 million. Although the office transaction volume is expected to surge in the second part of the year, the transaction level registered throughout 2011 will be hardly achievable.