Research & Consulting Department has publishes the Report At a glance, Office Market Review, Q3 2014, which analyses all important indicators of the office market including: supply, demand, vacancy rate and rents offered.
The total office supply in Warsaw is about to reach 4.4 million sqm. Our forecasts have proven right as decreasing demand combined with substantial increase of new office supply since the beginning of the year, have contributed to the rise of vacancy rate, especially in the central zones. At the end of Q3 2014 the overall vacancy rate for Warsaw reached around 14%.
Despite stable macroeconomic situation, we are recording continuous decrease in the volume of office space leased (excluding renegotiations). Compared with the corresponding period last year, demand dropped by approx. 25% to the level of 290,000 m2. This, combined with dynamic increase of new office space delivered to the market, is reflected in increased availability of space. According to the forecasts of BNP Paribas Real Estate the trend is likely to continue over the next quarters. By the year-end vacancy can reach 14.5% or even higher. In the next year it may grow to 16% – said Anna Staniszewska, Head of Research and Consulting CEE, BNP Paribas Real Estate.
This situation exerts impact on headline and effective rental rates. According to the report, since the beginning of the year, rents dropped on average by €1 and in the case of older schemes by €1.5-2. Additionally, landlords are offering more extensive incentive packages, which in case of large requirements can lower the effective rent by 25-30%.
We are expecting the rents to remain stable for the prime properties in Warsaw Yet, the other buildings are facing fierce competition to attract tenants. This issue particularly concerns older generation projects. The current situation requires from landlords high flexibility, including offering generous incentive packages for occupiers, both the new ones as well as those renegotiating. Additionally, owners have to be focused on effective management and should be prepared for flexible lease terms. It is the right moment for tenants to take advantage of this situation as this trend may reverse in the second half of next year – adds Anna Staniszewska.
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