According to the latest BNP Paribas Real Estate report entitled At a Glance Q2 2016; Office market in Warsaw, the total office stock past 5 million m². In second quarter, the bulk of 240,000m² office space was delivered in office towers located in the central office district. A further 100,000m² should be ready by the end of 2016.
A clear development spree continues as the volume of projects currently under construction can be estimated at around 650,000m². Additionally, BNP Paribas Real Estate is aware of approximately 1 million m² at the initial stages of planning.
City centre and fringe of centre buildings continue to attract most attention from tenants. More than 65% of take-up occurring in these subzones. Clearly, the metro line has had a major impact on the areas shown by the success of schemes located close to the Dworzec Gdański and Rondo Daszyńskiego stations - says Anna Staniszewska, Head of Research & Consultancy, BNP Paribas Real Estate, Central & Eastern Europe.
The vacancy rate increased to 15.2% at the end of June 2016, indicating a 0.7 p.p. growth compared to the first quarter. Such a trend is a direct consequence of supply increase over the first half of the year In terms of locations, the highest vacancy of around 18-19% is recorded within central areas and in the Upper South subzone (Mokotów) where it has reached 17-18%. When analysing availability of recently built vs. more mature schemes, the bulk of vacant space is in offices older than 10 years, with a vacancy rate close to even 30 %.
The vast majority of existing and pipeline office schemes compete fiercely for tenants, offering very attractive rental rates and accompanying incentive packages. The office market in Warsaw falls in perfect time for improving financial aspects of lease through the renegotiation of existing agreement or relocation. Occupiers are likely to be on the move, taking advantage of their strong negotiating position. New deals, pre-lets and extensions completed in Q2 totalled approx. 130,000m² –comments Małgorzata Fibakiewicz, Head of Office Agency, BNP Paribas Real Estate Poland.
Some trophy assets continue to quote from €21-22 perm². Average headline rates were in the range of 16.00-18.00 per m²/mth. Prominent non-central office buildings quote €13.50-15.00 per m²/mth, while average headline rates in these areas range from €11.00-13.00 per m²/mth.
BNP Paribas Real Estate experts foresee, rents will continue to decrease over the next quarters and bottom out over Q4 2016/Q1 2017.
