Warsaw leads Poland's burgeoning office space market
Published on 05/08/2015
Since the dark days of the recession, Poland has enjoyed an impressive economic recovery. GDP growth for 2014 rose to 2.5 per cent from 2.4 per cent the previous year, while 2015 also started brightly, with the Polish economy expanding by 3.6 per cent year on year in the first quarter.
One reason for this ongoing economic upturn is the performance of Poland's property market. Evidence of the sector's strength can be found in a new report from global commercial real estate company Colliers International, which reveals a significant upturn in demand for office space and a high volume of development work - driven by activity in Warsaw, Poland's capital and biggest city.
Clearly, this presents a significant opportunity for the building materials trade. Higher demand will naturally result in an upturn in office construction work, giving suppliers - both domestic and international - a greater chance to sell their materials to developers.
Demand for new office space surges in Warsaw
During the first half of 2015, gross demand for new office space in Warsaw reached 386,000 sqm - about half more than at the same point a year earlier. Particularly high levels of tenant activity were witnessed in the financial, IT and professional services sectors.
This demand was partly boosted by the continuing trend - both in Warsaw and key regional centres - for consolidation and relocation to new facilities.
Pawel Skalba, partner and director of the office agency at Colliers International, predicted the capital will remain a popular location for office construction and development, particularly in certain sectors. "It is worth noting that business process outsourcing and shared service centre tenants are looking increasingly favourably at the Warsaw market," he explained.
Across regional Poland, more than two-thirds of registered demand was focused on three locations: Krakow (78,900 sqm); Tricity, a metropolitan area in northern Poland comprising the cities of Gdansk, Gdynia and Sopot (52,800 sqm); and Wroclaw (40,100 sqm).
Development work increases in line with demand
Developers, recognising the ongoing strength of Warsaw's commercial property market, are building more offices in the city. From January to June, the Warsaw office market climbed by 147,000 sqm.
Colliers International identified a noteworthy trend in the location of new office developments. Almost four-fifths of all new office space in the capital was situated outside of the city centre, including schemes such as Karolkowa Business Park, Nestle House, Park Development II and Postepu 14.
Across the rest of Poland, Wroclaw saw the second highest volume of new office space at 50,900 sqm, followed by Poznan (48,400 sqm) and Tricity (31,700 sqm).
Warsaw's biggest office construction projects
A number of major office developments are underway in Warsaw, many of which are utilising plots that were previously occupied by communist-era monopolies.
One of the biggest current developments is Warsaw Spire, a 49-storey tower that will stand at 220 m in height when finished, making it the tallest office block under construction in eastern Europe. Due to be completed in March 2016, the tower has seen significant demand from prospective tenants, with two-thirds of the building already leased.
(By Tadeusz Rudzki (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons)
Another, Q22, has taken the place of Warsaw's first Mercure hotel, which was opened in 1993 and recently torn down. When completed next year, the 155 m tall building will boast 52,000 sqm of office space.
As well as new developments, some buildings are seeing complete redevelopments to bring them into line with modern office space requirements.
One notable example is the Kulczyk Silverstein Properties-owned Ethos building, which was formerly home to the Polish arm of Dutch finance group ING. Offering 10,500 sqm of office space spread over six storeys, it is located in Three Crosses Square, the city's prestigious historical, political and diplomatic district.
Jeroen van der Toolen, central Europe managing director for property developer Ghelamco, said the company is seeing "a lot of demand" for new office space in Warsaw.
Discussing the combined impact of this office construction and refurbishment work, he told the Wall Street Journal: "There's a big opportunity now because there will be a lot of new investment here, making it possible to change this space and ... finally create a coherent architectural design."