Warsaw real estate market - the second quarter of 2011

The growing interest and limited supply of office space will decrease the vacancy rate

In the case of commercial real estate, in the Polish capital, in the second quarter of 2011 the market becomes a lessor's market - according to the report "Real Estate Market Warsaw - the second quarter of 2011", prepared by Jones Lang LaSalle. The growing interest in the office space and the small number of new office developments creates the output gap - the demand from investors and tenants greatly exceeds the amount of space offered by developers. The recovery on the demand side resulted in lowering the vacancy rate below 6.2 percent of total supply observed at the end of June 2011. According to forecasts, the reduction of previously unused space will result in the growth of the rents. 

Warsaw office market is dominating market in the area of Central and Eastern Europe - the available resources amount to 3.5 million sq m of modern office space. Capital's position, as the leader, was not endangered by the moderate supply in the first half of the year. The market provided only 4 projects in the first half of the year: Pałac Młodziejowskiego, Mokotowska Square, Racławice Point and Platinum Business Park with a total area of over 28 thousand sq m. According to analysts, in the second half of the year the situation will improve, and the developers will give to tenants and investors another 111 thousand sq m. A large part of the new supply will be speculative projects, carried out in order to meet the gap in supply expected back in 2010. 
Offices located in the center, in Mokotów and in the south-western parts of the city are very popular. In the first and second quarter, 321 thousand sq m of office space were leased, as compared to the same period of previous year it represents an increase of nearly 45 percent (101 thousand sq m). The largest share of demand were renegotiated and renewed contracts. The growing importance of pre-let is noted - one of four contracts signed is a pre-lease contract. 
Among the new transactions, the biggest were the 9.1 thousand sq m in the Senator building by the company of the fuel sector and 2 thousand sq m leased by Ghelamco in Mokotów Nova. Renegotiations dominated the transactions involving Ernst & Young company (11 thousand sq m) in Rondo 1 and PTK Centertel in Renaissance Plaza (8.8 thousand sq m). 
Rents for prime space in the center range from 22 to 25 EUR per sq m / Month. For Class A + office buildings rents can be significantly higher. Outside the center, one can rent an office for 15-15,5 EUR / sq m / Month.
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