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Warsaw Office Market 2023: Facing Change and Finding Stability

REAL ESTATEWarsaw Office Market 2023: Facing Change and Finding Stability

Brookfield Partners systematically oversees all office spaces, regardless of the building category. The Office Market Pulse Report encompasses approximately 7.94 million m² of office space, representing about 1.7 million m² more than in competing reports. This comprehensive overview accurately reflects the actual state of Warsaw’s office market.

Warsaw Office Market in the Face of Changes and Challenges of 2023

According to the advisory firm Brookfield Partners’ report “Office Market Pulse – an overview of the office market in Warsaw”, the total resources of office space in the capital at the end of 2023 amounted to 7.94 million m². Of this total, class A buildings (modern office buildings with high standards and amenities) accounted for 4.99 million m², class B buildings (less modern but still providing a good standard) accounted for 2.64 million m², and class C buildings (office buildings of a lower standard or adapted for offices) covered 318,000 m².

New Supply and Projects Under Construction

In 2023, approximately 67,000 m² of office space was put into use in Warsaw. This is the lowest new office supply in years. Buildings put into use included Studio B with approximately 16,400 m² and Lakeside (approximately 22,700 m²). Since the outbreak of the pandemic in 2020, there has been a gradual decline in the area under construction. Between 2017 and 2019, the volumes were between 700,000 and 800,000 m² of space under construction, while at the end of 2023, 12 buildings totaling approximately 245,000 m² were under construction, scheduled to be completed between 2024 and 2025 – says Filip Sarzyński, Partner at Brookfield Partners.

Several projects expected to be completed in 2024 have not yet started, but if developers fulfill their announcements, the new supply from planned projects in 2024-2025 could amount to about 160,000 m². If the economic situation stabilizes and developers decide to continue with projects in preparation by the end of 2026, about 350,000 m² of new office space can be created. In recent years, developers have focused on the city center, but currently, the construction of new buildings is more evenly spread between central and non-central business centers.

Demand in the Office Property Market in Warsaw

The first few months of 2023 saw low tenant activity in the capital’s office market. Ultimately, in 2023, the demand for modern office spaces reached 748,800 m², with around 250,000 m² accounted for in Q4. Throughout 2023, approximately 800 lease agreements were concluded in Warsaw.

Challenges for Tenants

According to the “Office Market Pulse” report, the asking rent rates for office space in Warsaw remained stable in 2023. Rent for the best office buildings in central zones ranged between 21.0-25.5 EUR/m² per month.

Vacancy Rate

At the end of 2023, the volume of vacant space available for rent in all classes in Warsaw was about 897,780 m², translating to a vacancy rate of 11%. vacant office space in class A buildings was about 600,000 m² – The vacancy rate in class A was 12%.

Office Market Development Realities

The trend observed in 2023 was a clear decrease in developer activity in the office market. This decline had several causes. Interest rate increases were among them, in addition to the consolidation of the hybrid work style during the pandemic, which reduced demand for space. As a result, Warsaw recorded its lowest new office supply in years (approx. 67,000 m²) in 2023. Despite challenging conditions, the capital saw some interesting, new office buildings come into use – Filip Sarzyński, Partner at Brookfield Partners, concludes.

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