Wola takes the lead in Warsaw office race

In the area of Daszyńskiego roundabout, in the district of Wola adjacent to the city center, which is separated from Śródmieście district by Aleja Jana Pawła II street, several more office towers are under construction. By the end of 2021, several investments with high-rise buildings will be completed in this area. Projects such as The Warsaw Hub, Warsaw Unit, Skyliner, Warsaw Unit, Spark, Mennica Legacy Tower, Generation Park will enter the market, and in 2022 SKYSAWA office tower built at ONZ roundabout will also be completed. In addition, several interesting investments are also being carried out in this part of the city, including Chmielna 89 office building and Lixa complex, as well as the mixed-use projects of Browary Warszawskie and Fabryka Norbina.

Warsaw offices are primarily concentrated in three districts – Mokotów, Śródmieście and Wola. Around 75 per cent of the city’s office resources is located in this area.

The largest office buildings in Warsaw, with an area exceeding 30 thousand sq m. offer over a quarter of space on the capital market. However, the supply structure is changing dynamically, as several large-scale projects are currently being implemented in the agglomeration, mostly in the central area of the city, which will be commissioned this and next year.

Most office buildings are growing around Daszyńskiego roundabout, and soon this area will take over the leading position when it comes to offices in Warsaw. The central area of the city is gaining office towers, including the tallest building, not only in the capital, but also in the European Union. Varso Tower, built near the Central Railway Station, is to measure 310 meters with the spire. The high-rise building with two lower skyscrapers is being implemented as part of Varso Place investment, which will provide a total of 144 thousand   sq m. of space.

Wola’s high-rise buildings

In the area of Daszyńskiego roundabout, in the district of Wola adjacent to the city center, which is separated from Śródmieście district by Aleja Jana Pawła II street, several more office towers are under construction. By the end of 2021, several investments with high-rise buildings will be completed in this area. Projects such as The Warsaw Hub, Warsaw Unit, Skyliner, Warsaw Unit, Spark, Mennica Legacy Tower, Generation Park will enter the market, and in 2022 SKYSAWA office tower built at ONZ roundabout will also be completed. In addition, several interesting investments are also being carried out in this part of the city, including Chmielna 89 office building and Lixa complex, as well as the mixed-use projects of Browary Warszawskie and Fabryka Norbina.

New facilities, together with the modern office buildings already existing in the vicinity of Daszyńskiego roundabout, will create the largest office hub in Warsaw, which will have no equal in terms of standard of the offered space. The size of its offer will mean the capital’s new business center will match the resources of Służewiec Przemysłowy district, which thanks to its cubature is still the largest office zone in Warsaw, and in Poland. However, this district is no longer developing today. Apart from the building at the intersection of Marynarska and Taśmowa streets, which is to become the headquarters of DSV, no office investments are carried out in this area.

Służewiec under transformation

Nevertheless, the largely monofunctional Mokotów office area, which has 1.1 million sq m. of space, for some time has been successively changing its character to become attractive again to tenants. Służewiec is consistently moving away from a typical office character. By changing the functions of some buildings and introducing residential and hotel investments, as well as additional services and attractions, such as a linear park or amphitheater, it wants to become an interesting location also after business hours.

The first hotel – Hampton by Hilton Mokotów opened in Służewiec in 2018. Recently, Holiday Inn Express Mokotów was commissioned at Postępu street, and Focus Hotel Premium is soon to welcome its guests at Woronicza street. Another two hotel facilities – Moxy&Residence Inn and Holiday Inn Warsaw Mokotów are in the planning stage. According to the estimated data, after their commissioning, this area will have to offer about 1600 hotel rooms.

New residential investments are also planned in Służewiec. Echo Investment purchased four office buildings and plots of land within the Empark complex and announced the construction of a residential estate to replace them. In recent years, approximately 3.9 thousand apartments have been commissioned in this area. A similar number is to emerge in the investments planned today.

Changes are also taking place in the office buildings themselves. Their owners want to offer similar amenities to those provided by office buildings in the city center. Among others Tulipan House, Park Postępu, Horizon, Adgar Plaza One, Adgar Wave, Innova and Signum Work Station (former Trinity Park II and III), and buildings at 7 and 7a Cybernetyki street are a subject to modernization.

Record demand for Warsaw offices

Meanwhile, office space in Warsaw is extremely popular. Offices located in the central area of the city enjoy the largest interest of tenants. According to Walter Herz, in 2019 the rental volume on the Warsaw market once again reached a record value, and today, its absorbency is the highest in history. – Last year, nearly 880 thousand sq m. of office space was leased in Warsaw. Pre-lease agreements have been made for around a quarter of this amount of space. The increase in the share of this type of contracting in the rental volume is clearly visible. Increasingly more companies are also reporting the need to lease large spaces, exceeding 10 thousand sq m. Last year has also brought unprecedented contracts, with over 40 thousand contracted sq m. of offices. A compression of incentives offered by building owners is visible on the market. High demand for space means that tenants much earlier, even 2-3 years before the end of the lease agreements, begin to analyze market opportunities in order to be able to make the best decision and either renegotiate the contract or change the office – notes Bartłomiej Zagrodnik, Managing Partner / CEO at Walter Herz.

Warsaw city with modern skyscraper at sunset, Poland

Bartłomiej Zagrodnik, Managing Partner / CEO at Walter Herz

Low availability of completed offices means that companies decide to book space in emerging office buildings more often than before. Over 850 thousand sq m. of offices are under construction in Warsaw. Most of this space will be delivered this and next year. According to Walter Herz, in 2019, just over 160 thousand sq m. entered the Warsaw market.

– In the near future, we will probably be able to observe further market records in Warsaw. This time, not only related to demand, but also supply. This year, the capital’s office resources may increase by 450 thousand sq m. of space, and next year should bring another 400 thousand sq m. of new offices. The volume of new supply will depend on whether the construction will be completed within the assumed timeframe. Above-average new supply will not, however, upset the balance on the Warsaw market, because it enjoys great popularity of international business. High-class offices in the most modern facilities quickly find tenants – adds Bartłomiej Zagrodnik.

According to Walter Herz, the vacancy rate in the center of Warsaw currently does not exceed 5 per cent. Outside the central area, it dropped to around 9 per cent. There is also less free space in Mokotów district. Although Służewiec Przemysłowy still has the highest vacancy rate on the Warsaw market, the transformation and improvement of transport infrastructure in this part of the city, has significantly increased its attractiveness. Companies present in this area, more and more often decide to extend their lease agreements. It is also motivated by much lower rental rates offered in this location than in the city center, which are in the range of 13.0 – 14.5 EUR/sq m.

About Walter Herz

Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For seven years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects.

In addition to its headquarters in Warsaw, the company has branches in Cracow and Gdansk. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.