Even with the latest report by the international consulting company Savills showing that in 2022 the stock of modern office space in Europe will increase by more than 5.7 million sqm, Warsaw is expected to face shortages.
According to the Savills report, nearly half of the almost 6 million sqm of office space has already been secured by pre-let agreements. In Warsaw, the lively demand and shortages of new space supply will translate into a marked decrease in the vacancy rate – Officerent Info writes.
Finishing costs getting hard to estimate
The platform informs that in 2023, 5.1 million sqm is planned for commissioning in the office real estate market in Europe. This means that the annual supply in the next two years will be 43% higher than the average for the previous five years. This is a remarkable tendency regarding the rising construction costs and supply-chain difficulties which can easily cause delays and affect the cost of finishing.
According to Mike Barnes, associate director in the commercial real estate research department in Savills, there is an increase in tenants’ interest in new and energy-efficient offices due to the pursuit of their goals of reducing carbon dioxide emissions by 2030. This trend is additionally strengthened by rising energy prices. Professionals forecast that in 2022 the demand for office space in Europe will increase to approximately 9 million sqm and will maintain such dynamics in 2023.
Appropriate management can bring higher rents
The fate of older, lower-standard office buildings and the amount their owners would be willing to invest are becoming increasingly important. The research shows that the cost of upgrading the energy class of an office building from D to B is on average around EUR 500 per sqm. “Therefore, we anticipate that the gap between rents in the most attractive office buildings and buildings with lower performance will increase, creating opportunities for owners who could obtain higher rents through appropriate management of older assets” – adds Christina Sigliano, Head of Tenant Solutions in EMEA.
The financial and IT sectors are active in Warsaw
In the first quarter of 2022, 273.2 thousand sqm was leased in Warsaw – it was one of the highest quarterly results in the history of the Warsaw market. In the last month, the most active were companies from the public, financial and IT sectors, which accounted for 42 % total demand for offices in Warsaw.
Temporary shortage to expect
Rising construction costs, as well as an increase in utility charges, are the challenges that the Polish office real estate market is currently facing. At the same time, more and more employees return to their offices, and companies are resuming lease processes and looking for a location for their headquarters for the coming years.
From January to December 2021, the capital city authorities issued six building conditions decisions and seven new applications were filed with the City Hall at the same time. This is a positive signal, but before these facilities are put into service, we will see shortages in new supply on the market.