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Polish Property Market
commercial real estate prospects
According to CBRE, the largest real estate advisory in the world by 2011 revenue, the Polish capital Warsaw continues to be a hot commercial real estate prospect. Some 1.5 billion Euros was invested in the market in the first 3 quarters of this year, and the firm believes this will hit 2 billion by the end of the year end based on demand and deals already underway and due to be completed in the final quarter.
According to the report the office sector is leading the charge; indeed ten office transactions generated 30% of the total investment volume, including the purchase of the Twarda Tower in Warsaw by Europa Capital and a portfolio of two office buildings by Kulczyk Silverstein Properties. What is particularly promising is the fact that more and more of the demand, particularly occupier demand is moving outside of the central business district.
Daniel Bienias, Director of the Office Agency at CBRE, said: “Although the Warsaw market has been performing relatively well, a major demand driver is the quest for cost reductions. Companies are seeking to consolidate and looking for new, more flexible headquarters at lower rent. As a result, non-central locations are attracting more tenants and the fringe of the city centre has gained popularity due also to a more diversified offer.”
The report also found that short supply of retail properties is driving up rents in the sector. Indeed, with just 1.33 million m² of modern space, and a low vacancy rate of just 1.6%, which is mainly in the oldest and poorly performing centres, there is a clear indication that demand is outstripping supply.
Two new developments came online in the sector this year, the Galeria Brwinowska (10,000 m² of GLA) in Q1 in Brwinow, and Auchan Gallery in Lomianki (33,600 m² of GLA in total) to be opened by the end of the year, and two more will be delivered next year Galeria Miejska Plac Unii, with 15,300 m² of retail GLA and Factory Annopol, a new outlet centre in Bialoleka district. This lack of supply continues to push up rents for the best schemes and locations, making Warsaw the most expensive retail location in Poland, with prime rents at about €90/m²/month (for the best units of approximately 100 m² in a prime shopping centre) and average rents at €30–45/m²/month.
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