Which European cities will have definitely more new investments in the upcoming years?
The demand and supply relation on the European markets is very sustainable. The increasing employment in the sectors which present big demand for office space in Europe will support the demand for office areas in the next two years. Additionally, the relatively low developers’ activity and stable demand have contributed to the unprecedented seven-year-long period of sustainable increase in rent rates which enhanced profitability of office projects. These conditions encourage developers to start new office investments. We envisage continuing popularity of such cities as Paris, Vienna or Brussels, which will reach the peak of a cycle in the next two years. The greatest increase in investments will be recorded in Istanbul, Budapest, Madrid, Milano and Amsterdam.
What is the current situation on the Polish office market?
The office market in Poland corresponds to the global changes. We observed both record-breaking values of annual supply and record-breaking demand last year. At present, the developers’ activity has slightly slowed down. However, this situation is temporary as we expect another record in 2020 concerning the number of delivered space. The vacancy rate in Warsaw has increased up to 14 per cent but it will drop to 13.5 per cent due to the envisaged strong net absorption in 2018. New and good office projects are rented relatively fast. What is more, availability of space increases mainly in older buildings.
The increase in supply of modern office space is therefore a “threat” mainly for older buildings and those of lower class. What actions should be undertaken so that they could compete for tenants with modern investments?
The majority of owners compete with the price. However, we can observe that the rent rates are not considered important by new tenants in the decision-making process. Hence, a good opportunity for older buildings is the increase in investment outlays for a better standard of buildings and intense actions aimed at changing the location on the market. Several investors have succeeded but others, especially those with badly located investments, have to transform their existing buildings to other functions or destroy them so that they could be developed differently, for instance, for residential purposes.
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