The Warsaw office market in the fourth quarter of 2024 continued the trend of stable demand with a simultaneous limitation of new supply. Tenants are looking for space in the city center, expecting balanced solutions – such conclusions come from the “At a Glance. Office Market in Warsaw” report for the fourth quarter of 2024 from BNP Paribas Real Estate Poland.
Low new supply in 2024
In the IV quarter, only 11,000 sq.m. of modern office space was granted within one project – The Form in Centre West Zone. This means that in the whole of 2024, a little over 104,000 sq.m. of new office space was delivered to the Warsaw office market, which is the second lowest annual result in history.
– Between January and December, the most space was provided in central locations – a total of over 86,000 sq.m., which is almost 83% of the total new supply delivered in the capital during 2024. The same will be in 2025, as about 90% of the volume of new space under construction, with a completion date by the end of 2025, is being created in the center of Warsaw – emphasizes Małgorzata Fibakiewicz, Senior Director of Office Space Leasing, BNP Paribas Real Estate Poland.
It is worth noting that the limited availability of attractive land in the center may be a factor hindering greater developer activity in this part of the city. On the other hand, attracting tenants under pre-lease agreements is a prerequisite for starting construction outside the center.
The need for larger spaces?
The total gross demand in the fourth quarter amounted to 244,000 sq.m., which means an increase by 35% compared to the third quarter, but a decline by 4% year on year. The center of Warsaw remains the most popular location – over 54% of leases were signed here.
Once again, the predominance of demand over new supply resulted in a slight decrease in vacancy rates in this quarter. At the end of quarter IV 2024, the vacancy rate stood at 10.6%, representing a slight decrease compared to the previous quarter. In the city center the vacancy rate was lower (8.8%), while outside the center it reached a level of 12%.
Quoting BNP Paribas Real Estate Poland analysts, at the end of year, despite 664,000 sq.m. of office space being available, unoccupied spaces are scattered and often divided into smaller modules. Tenants seeking large, open spaces may have trouble finding a suitable building. At the end of the fourth quarter in the Warsaw office market, only 5 projects offered free space larger than 10,000 sq.m.
Green office buildings and new market challenges
Tenants are increasingly looking for offices meeting ESG standards, affecting developers’ strategy.
– The real estate industry has a huge impact on the environment, studies show that buildings account for about 40% of global energy consumption and 30% of greenhouse gas emissions. Therefore, striving for sustainable development in the real estate sector has become a priority not only for development firms, investors but also tenants who expect from office building owners minimization of the negative impact on the environment. – emphasizes Dorota Mielke, Deputy Director, Office Rental Department BNP Paribas Real Estate Poland.
Therefore, interest in buildings with environmental certificates, like BREEAM and LEED, is increasing, and the use of energy-efficient technologies will become a key factor for the future of the office market. Changing regulations and pressure on social and environmental responsibility will no doubt continue to shape the market in this respect. The rapidly changing work environment is also a key issue.
– Clients are increasingly analyzing the relationship between design and budget, expecting comprehensive solutions that include trends like revitalization of space and optimization, while increasing functionality. Office design is becoming increasingly complex, and responsible planning is necessary to minimize risk, especially volatility in long-term leases – says Jan Pawlik, Workplace Management Director, ISS.
Article written by The Editorial Team
Source: https://ceo.com.pl/inwestycje-biurowe-w-warszawie-analiza-i-trendy-po-koncowce-2024-roku-53672
