The Warsaw office market is witnessing significant activity with 225,000 square meters of office space currently under construction and an additional 58,000 square meters undergoing modernisation, according to a recent report by CBRE. Demand for office space in the Polish capital has surged, reaching 178,500 square meters in the second quarter of 2024—an impressive 30% increase from the previous quarter.
Despite a slowdown in development activity due to various factors, including limited land availability, elevated interest rates, and the ongoing impact of hybrid work models, the demand for office space remains robust. Notably, the first quarter of 2024 saw the completion of four projects totaling 48,700 square meters, while the second quarter saw the completion of the Vibe A office building, spanning 15,000 square meters. Warsaw’s office market now boasts over 6.25 million square meters, with most properties being modern, environmentally certified buildings, as highlighted by Paweł Dobrowolski, Director of the Office Space Department at CBRE.
The report indicates that the buildings undergoing modernisation include V Tower (formerly Warta Tower) on Chmielna Street, G5 Prime Offices on Grójecka Street, and Lakeside II (formerly UBC II) in Mokotów.
In the second quarter of 2024, leasing activity was strong, with tenants signing contracts for 178,500 square meters—an 8% increase compared to the same period last year and a 30% rise from Q1 2024. The majority of this demand came from contract renegotiations (63%), while new deals accounted for 38%, and expansions made up 7%. Major transactions were predominantly in the financial sector, with two financial institutions leading the way in renegotiations.
Office space in Warsaw continues to attract interest from various sectors, with financial and industrial sectors being the largest contributors to demand. The city centre remains the most sought-after location, accounting for 40% of all leased space, followed by Służewiec with 23%.
The vacancy rate in Warsaw’s office market stands at 10.8% on average, with the rate in the city centre decreasing to 9.1% in Q2 2024. Other areas of the city have a vacancy rate of 12.3%. While the major new office building completions for the year have largely occurred, the market anticipates the delivery of smaller buildings and additional modernisation projects in the latter half of the year. Katarzyna Gajewska, Director of Market Research and Analysis at CBRE, suggests that while demand is expected to remain stable, a few larger transactions could emerge in the upcoming months.
Source: CBRE and ISBnews
