The Warsaw office market saw a shrinking volume of space under construction and increasing pressure on rents in 2022. However, according to the latest report by Cushman & Wakefield, the capital's market could see a significant tenant recovery as contracts signed in the record period of 2018-2019 come up for renewal.
Tenant activity increased despite market uncertainty
The high demand in 2022 was a result of both the accumulation of large-scale deals by tenants from the financial, business services and IT sectors, as well as an improved rental market. This is confirmed by the number of transactions finalized in 2022, which totalled 860, an increase of nearly 39% compared to the same period in 2021,
comments Katarzyna Lipka, Head of Consulting & Research, Cushman & Wakefield.
In the next twelve months, the Warsaw office market will see contracts concluded in the record years of 2018-2019 coming up for renewal. The increased number of processes expected to start this year may have a positive impact on the demand for office space throughout 2023. Nevertheless, the prospect of economic slowdown may translate into tenants becoming more cautious about their business plans and as a consequence, leasing office space,
explains Joanna Blumert, Head of Occupier Services, Cushman & Wakefield.
Lower development activity now a reality
There is currently about 181,500 sqm under construction in Warsaw. According to our estimates, the capital's office market will expand by just 66,000 sqm this year, which will mark the start of a "supply gap" that could last until 2025,
says Jan Szulborski, Office Expert, Cushman & Wakefield.
Better control over the level of development costs may give the Warsaw office market a positive boost in terms of launching new projects. Meanwhile, due to the current economic environment, new projects are likely to be situated in the most attractive locations, enabling developers to maximize their return on investment,
adds Jan Szulborski.
Lower planned supply with relatively high tenant activity will reduce available office space
With a reduction in new supply in 2023, we will see a continued downward trend in the rate of available space, which will allow markets to absorb any excess available office space in the existing stock. However, it is important to note that the rate of absorption will be strongly correlated with the dynamics of economic growth, which will influence companies' decisions to invest and increase staffing levels,
summarizes Katarzyna Lipka.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in 400 offices and 60 countries. In 2021, the firm had revenue of $9.4 billion across core services of property, facilities and project management, leasing, capital markets, and valuation and other services. To learn more, visit www.cushmanwakefield.com