The new Warsaw City Report provides a summary of the commercial real estate sectors together with an overview of the investment market in Warsaw and also for the first time, an overview of the hotel and residential markets, contributed to by Jones Lang LaSalle Hotels and REAS respectively. Jones Lang LaSalle has always aimed at addressing the enquiries from the market and therefore, for the first time, reviews of the residential and hotel markets were incorporated.
The key messages in this edition of the Warsaw City Report are as follows:
- Transaction volumes in Poland set a new record at around 4.5 billion for 2006.
- Retail developers are looking for development opportunities and sites driven by the favourable economic situation and significant occupier demand.
- Office vacancy reached an all time low of 5.4% whilst lagged construction activity is now booming in Non-Central districts.
With regards to the office market, Anna Kot, Head of the Agency Leasing and Tenant Representation teams at Jones Lang LaSalle, adds: "Strong demand for office space coupled with limited office completions in the recent years resulted in record decrease of vacancy in all Warsaw submarkets. At the moment we are observing increased rental levels especially in the most popular office locations such as the City Centre and Mokotów. Prime headline rents in the City Centre will remain high. Non-Central locations this year will be followed by significantly increased development activity and therefore occupiers planning to relocate after 2007 can expect more favourable terms than those moving earlier."
The retail market in Warsaw is the most developed amongst major cities in Poland. Commenting on that sector, Anna Wysocka, Associate Director at Jones Lang LaSalle's Retail Agency said: "Development activity in Warsaw has slowed down for the past several months which was caused by such factors as planning restrictions for large scale retail or the high competition among developers caused by the high retail space density in Warsaw. During the last six months only one shopping centre was opened in Warsaw, which was Z³ote Tarasy. Currently there are several projects in the pipeline including: Centrum Familijne in Skorosze of IIC, Fashion House Piaseczno Phase III of TOC or Wilanów City Center of Prokom/Immochan.
The increasing brand awareness of Warsaw and Polish customers, together with changes in spending patterns and increased consumption is making the retail market more and more attractive for retailers. Together with the opening of Zlote Tarasy we have observed entries of several new brands on the Warsaw market. These were for example; MAC, Body Shop or Next operated by Alshaya Group or Bershka, Pull & Bear, Stradivarius and Oysho of Inditex Group. Also from the food sector there are announcements of such entries to the market as Costa Coffee, Starbucks, the comeback of Burger King or the opening of Hard Rock Café."
2006 was also a spectacular year for the industrial market, especially in terms of the number and size of lease transactions in the industrial sector. "Apart from Warsaw, Silesia, Poznañ, Central Poland and Wroc³aw remained the most popular locations in Poland in respect of leasing activity and those regions also have considerable development potential due to the current and proposed location of highways." added Beata Hryniewska, Head of Industrial & Logistics at Jones Lang LaSalle.
And finally, commenting on the property investment market, Tomasz Trzós³o, Head of Investment at Jones Lang LaSalle concluded: "2006 was a fantastic year in terms of the number and volume of transactions, especially in the office sector. There were a lot of spectacular transactions, including the sales of Rondo 1, the Metropolitan, Warsaw Trade Tower, Europolis office portfolio and Winiowy Business Park. The market has matured, with the yield gap between Central and Western Europe now closed. In 2007 we should see retail transactions taking a much bigger share of the market but also more development, joint ventures an