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Warsaw Office Space Demand Reaches 139,000 sqm in Q1 2024, with Tenants Preferring Non-Central Locations

REAL ESTATEWarsaw Office Space Demand Reaches 139,000 sqm in Q1 2024, with Tenants Preferring Non-Central Locations

In the first quarter of 2024, the demand for office space in Warsaw reached 139,000 sqm, accounting for half of the total leased space in Poland. Tenants predominantly signed leases for buildings located outside central zones.

As of the end of Q1 2024, Warsaw’s total office stock amounted to 6.2 million sqm. The highest concentration is in central zones, which host 45% of the total stock, and in Służewiec, which accounts for 17%.

“Developer activity remains limited. In the first three months of the year, the Warsaw office market grew by 49,000 sqm, with an additional 57,000 sqm expected in subsequent quarters of 2024. Under this scenario, it will be the second-lowest new supply in 20 years,” comments Dorota Lachowska, Head of Market Research at Knight Frank.

Developers continue to focus on central zones, where nearly 94% of the new space is being developed. New investments are primarily concentrated around Rondo Daszyńskiego, transforming Wola from an industrial to a business district.

From January to March 2024, the amount of leased office space exceeded 139,000 sqm, a decrease of 11% compared to the same period last year.

“Tenant interest was mainly focused on buildings outside central zones, where 64% of the space was leased, primarily in Służewiec and along Aleje Jerozolimskie. Additionally, we observe growing awareness among companies regarding sustainable construction, reflected in the increased number of spaces leased in buildings with green certifications (63% of the leased space in the first quarter was certified),” explains Izabela Dąbrowska, Director of Tenant Representation at Knight Frank.

New leases accounted for the largest share of transactions at 48%, while renewals represented 35% of signed agreements. Expansions increased by 6 percentage points, constituting 10% of the leased space in Q1. The significant share of renewals and the growing proportion of expansions indicate that cost reduction, including moving and adapting spaces to their needs, remains important for tenants.

“At the end of Q1 2024, the vacancy rate in Warsaw was 11%, up by 0.6 percentage points compared to the previous quarter. The central zones saw the largest increase in vacancy levels, where 86% of the total new supply (42,000 sqm) was delivered. The vacancy rate there reached 9.6%, an increase of 1.1 percentage points from the previous quarter. In non-central districts, the vacancy rate was 12.3%, similar to the previous quarter (up by 0.4 percentage points). Greater stability in these locations is due to low new supply and higher tenant demand,” adds Dorota Lachowska.

Asking rents for office space in Warsaw remained mostly stable in Q1 2024. In modern office buildings located in central areas, rents typically ranged from €18.00 to €27.00 per sqm per month, though rents for prime spaces in prestigious buildings can significantly exceed this range. Outside central areas, asking rents generally ranged from €10.00 to €17.00 per sqm per month, offering an attractive alternative for companies seeking more affordable office solutions. Service charges in Q1 2024 varied widely but generally ranged from PLN 18.00 to PLN 38.00 per sqm per month.

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