Service charge evolution

Service charge (besides the bread-and-butter rent) is the second obligatory fee paid by a tenant in an office building.

Service charge (besides the bread-and-butter rent) is the second obligatory fee paid by a tenant in an office building. 

Service charge in the majority of office buildings cover the following costs:

  1. Security building
  2. Clearing-up buildings acreage and terrains around the object
  3. Maintenance of technical building (therein repair work and modernisation)
  4. Property insurance, defrayal and taxes (i.a.: property tax and perpetual exploitation of ground fees)
  5. Heating, air-conditioning, ventilation of common deliverable
  6. Electricity of common deliverable
  7. Property management

In many modern office buildings in Poland (+A class, A and B in Warsaw, A and B in Cracow, and other big regional cities) tenanting by a few companies, calculation of service charge takes place on the basis on acreage using by a tenant, increased with add-on factor (coefficient of common acreage that in office buildings include i.a. lobby, elevator halls, toilets and technical rooms).

During the last 7 years changes and development of office buildings in Poland are seen in service charge. They are seen in the following areas:

  1. Diversification of pay rate indicator between Warsaw and regional cities
  2. Differentiation of fees accordingly to building class within a city
  3. Currency evolution

Fees diversification in accordance with a particular city takes place, i.a. accordingly to significant tax share and real property fees in overall rates of building exploitation. Differences between grunt values in Warsaw and other cities make that service charge are higher than those in regions. What is more, a similar tendency is seen as far as A and B class buildings are concerned in certain cities. The best objects are localised in central regions where parcels are more expensive than in the outskirts. Additionally, higher costs of service charge are localised in buildings of perpetual exploitation of ground. 

Furthermore, it should be emphasized that differences in service rates fees in Warsaw and other cities depend on differences in salaries of companies connected with i.a. cleaning-up, security or maintenace of technical building.

Systematic development of Polish economy and first of all joining the EU have caused that many investors has started to perceive Poland as the country with lower risk. The increasing scale of investment is also observed (including real properties) achieved by investors paying in euro. After joining Poland the EU contracts share has been increased, whereas until 2004 the most of tenant rents and service charges sum was in dollars. This state lasted till 2008 when global financial market was unstable and the owners of office buildings started to have problems with determining sum of deposits for service charge that were proper for picking up the tab (paid in PLN). It is seen a significant dominance in building office since 2009 on office market where the sums of money are paid in PLN. It is expected that this phenomenon will be developed on similar or even a grand scale in the future.

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