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Highlights• Warsaw office take-up totalled 328,741 sq m in H2 2010, bringing the annual

volume to 549,206 sq m, a substantial 96% increase compared with 2009.

• The vacancy rate fell to stand at 8.4% by the end of 2010, down from the five year high of 9.6% recorded at the mid-year point.

• Prime headline CBD rents reduced to €283 per sq m per year, down from €288 recorded at the end of H1 2010, indicating it is still an occupiers' market. However with a limited amount of new space expected to be delivered over the coming year, rents are likely to rise.

• The volume of commercial property investment in Poland increased by over 76% in H2 2010 compared to the first half of the year, bringing the annual total to €1.74bn. With renewed market confidence and limited available product, prime yields hardened by 25bps to stand at 6.75% at the end of 2010.

T

H2 2010

WARSAW Office market report

H2 2010WarsawOffice market report

2

Table 1

Selected transactions signed in H2 2010

Property Submarket Tenant Size (sq m) Transaction type Sector

Millenium Plaza CBD Asseco 8,600 Renewal IT/Telecommunication

Centrum Żelazna CBD ZTM 6,500 New Professional Services

Libra Business Centre Al. Jerozolimskie Infovide - Matrix 6,000 Pre-let IT/Telecommunication

Stratos CBD Bre Leasing 5,600 Renewal Finance/Banking

Vipol Plaza Wola Polimex Mostostal 4,800 New Construction/Real Estate

Millenium Park D Mokotów (incl. Służewiec Przemysłowy)

Mediaedge 3,100 New Media/Marketing

Kaskada CBD Alstom Power 2,500 Renewal Energy

Warsaw Financial Centre CBD Kompania Piwowarska 1,900 Expansion Production/FMCG

Source: Knight Frank

Office take-up totalled 549,206 sq m in 2010, a substantial 96% increase on 2009

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Figure 1

Warsaw office take-up and vacancy rate000s sq m %


Take-up Vacancy rate

Market commentaryWhile Poland avoided recession in 2009, the

Warsaw office market nonetheless felt the

effect of the global economic downturn over

the past two years with falling rents and rising

vacancy rates. However positive signs of

recovery were observed throughout 2010.

The wider economy paints an encouraging

picture for Poland in 2011 with GDP growth

forecast at 3.7% by the IMF, while, for context,

the European Union as a whole is forecast

growth of 1.8%.

The second half of 2010 experienced a surge

in occupier activity with take-up totalling

328,741 sq m, 49% up on the first half of

the year, bringing Warsaw’s annual take-up

total to a substantial 549,206 sq m, a huge

96% increase on 2009 and the highest

take-up figure recorded in the past decade.

Many occupiers brought their expansion

or relocation plans forward to conclude

transaction terms while rents are relatively

low and favourable incentives have been on

offer. With limited new supply in the pipeline,

and prospects of rental growth in 2011,

tenants have been keen to conclude lease

agreements as they are aware the market

may shift back in favour of landlords.

There was 137,280 sq m of modern office

space delivered to the Warsaw office market

in 2010, approximately 51% below the amount

delivered in 2009. However, it is worth

noting that the large majority of the schemes

completed in 2009 commenced before the

economic downturn. As an after-effect of the

number of schemes put on hold during the

downturn, Knight Frank only expects to see

75,900 sq m of new space delivered to the

market in 2011, 44% down on 2010’s total.

Warsaw’s office vacancy rate fell to 8.4%

by the end of 2010, down from the five year

high of 9.6% recorded at the mid-year point.

The vacancy rates for all submarkets, other

than Al. Jerozolimskie, fell from their mid-

year levels by the end of the year, with Al.

Jerozolimskie only modestly increasing from

5.4% to 5.7%. The largest fall in submarket

vacancy rates was in Wola, down from 10.8%

to 5.1%, primarily due to a large transaction

at Vipol Plaza of 4,800 sq m let to Polimex

Mostostal. Availability remains highest in

the Mokotów submarket at 9.5%, which

itself is down from the 10.9% recorded at

the end of H1 2010.

Prime rents in Warsaw ended 2010 at €283

per sq m per year, down from €288 at the

mid-year point. In light of the tightening

supply it is anticipated that rents will not fall

any further in the current cycle and are likely

to rise in the coming year.

Łomianki

Bielany

Białołęka

Targówek

Praga PłBemowo

Mokotów

Śródmieście

Żoliborz

Ożarów

Pruszków

Janki

Piaseczno

Port LotniczyWarszawa Okęcie

Józefosław

Ursynów

Ursus

Włochy

Ochota

Wola

www.KnightFrank.com

3

Mokotów (incl. Służewiec Przemysłowy)

Warsaw region

Zajezdniatramajowa,Mokotów

Marynarska

Woronicza

Rodz

iny

Wirazow

a

Al. Wilanowska

Konstruktorska

Domaniewska

Suw

ak

Woł

oska

Służewiec

His

zpań

skic

h

Warsaw CBD

Prosta

NościAl. Prym

asa Tysiącllecia

Górczewska

Al. Solidar

Wolska

Palace of Cultureand Science

OgródSaski

WARSZAWACENTRALNA

Praga

Mariensztat

Powisle

Mirów

Al. Jana Pawla II

Marszalkow

ska Al. Jerozolimskie

Prosta Świetokrzyska

Al. Ujazdow

skie

Wola

KASPRZAKA

Warszawa

ZachodniaWarszawa

Zachodnia

Prosta

Ności

Wolska

Al. Prymasa Tysiąclecia

Górczewska

Wolska

Al. Solidar

Al. Jerozolimskie

Prosta

NościAl. Prym

asa Tysiącllecia

Górczewska

Al. Solidar

Wolska

Wiktoryn

Warszawa

Zachodnia

ParkSzczesliwicki

Szczesliwicki

Ochota

Al. Jero

zolim

skie

Grój

ecka

Grzymały

4

Table 2

Key investment transactions in H2 2010

Property Vendor Purchaser Size (sq m) Price (€m)

Topaz/Nefryt GTC RREEF Investment 27,000 79.0

Mokotów Plaza I Celtic Asset Management Azora 15,300 33.0

Athina Park Echo Investment PZU FIZ SN 12,000 32.1

Victoria Deka Immobilien Investment

IVG Institutional Funds

12,204 29.0


Poland data

Poland population 38.19m

Warsaw Metropolitan area population

2.79m

Poland GDP growth 2010/2011 forecast

3.8%*/3.7%

Poland inflation rate 3.1%

Poland unemployment rate (September 2010)

11.5%

Poland National Bank Reference rate

3.5%

PLN/EUR exchange rate 3.96

PLN/USD exchange rate 2.99

Source: Poland Statistical Office/IMF Dec 2010 data quoted unless otherwise stated. * preliminary estimate – Jan 2011

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Mokotów (Incl. S_u_ewiec Przemsy_owy)

Wola

CBD

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Figure 3

Submarket vacancy rates%


CBD Al. Jerozolimskie Mokotów Wola (incl. Służewiec Przemsyłowy)

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Other

Wola

Mokotów (incl. S_u_ewiec Przemys_owy)

Jerozolimskie Av.

CBD

2004 2005 2006 2007 2008 2009 2010

Knight Frank Light GreenPantone: 368CMYK: 70, 0, 100, 0

Light Green S1Pantone: 625CMYK: 64, 16, 42, 33




Figure 4

New supply by location000s sq m


CBD Al. Jerozolimskie Mokotów Wola Other (incl. Służewiec Przemsyłowy)

200

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Figure 2

Prime office rents€ per sq m per annum


Polish commercial property investment volumes totalled €1.74bn in 2010, a 142% increase on 2009

Investment marketThere was a marked improvement in investor sentiment in the second half of 2010, with Polish commercial property investment volumes totalling €1.11bn, bringing the annual total to €1.74bn, an increase of 141.7% compared to the low of €719m in 2009. A number of large scale transactions occurred during H2 2010, including the sale of the Topaz and Nefryt, both grade A specification buildings in the Mokotów submarket of Warsaw, from GTC to RREEF Investment for €79.0m. Totalling 27,000 sq m, the yield was 7.2% and tenants include Roche, Allianz, Cisco Systems, Motorola, Honeywell and Noble Bank.

With signs of renewed market confidence and a limited supply of investment product in 2010, prime yields compressed by 25bps from the mid-year point to stand at 6.75% at the end of H2 2010.

Investors continue to be focused on prime assets; however choice remains limited and yields are expected to harden further throughout 2011.

H2 2010WarsawOffice market report

5

Table 3

Figures at the end of 2010

Area Prime rent (€ per sq m per annum)

Stock (sq m)1

Vacancy rate (%)2

Vacant space (sq m)

CBD 283 1,207,633 9.0 89,800

Mokotów (incl. Służewiec Przemysłowy)

206 946,393 9.5 79,283

Wola 202 234,340 5.1 8,914

Al. Jerozolimskie 228 294,563 5.7 16,605

Other - 659,975 8.1 42,499

Warsaw total - 3,342,904 8.4 237,1011 Including owner occupied stock 2 Vacancy rates reflect vacant space in leasable office premises, excluding owner occupied stock Source: Knight Frank

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saw

tota

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Al. J

eroz

olim

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Mok

otów

(inc

l. Sł

użew

iec

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łow

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Wol

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Oth

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Figure 5

Offices under construction by submarket and completion date 000s sq m


2011 2012

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Figure 6

Prime office yields %


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Figure 7

Poland commercial property investment volumes €bn


Mokotów Plaza

Victoria

Renewed market confidence in H2 2010 pushed prime yields down to 6.75%

RESEARCH

Warsaw Joseph BorowskiManaging Partner +48 (22) 596 50 50 [email protected]

Monika A. DebskaChairman of the Board +48 (22) 596 50 50 [email protected]

Magdalena CzempińskaResearch +48 (22) 596 50 50 [email protected]

LondonChris BellManaging Director, Europe+44 (0) 207 629 [email protected]

Matthew ColbourneSenior Analyst+44 (0) 207 629 [email protected]

Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs.

Knight Frank Reports are also available at www.knightfrank.com

© Knight Frank LLP 2011

This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted by Knight Frank Research or Knight Frank LLP for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is allowed with proper reference to Knight Frank Research.

Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.

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h2 2010 warsaw - microsoft · victoria deka immobilien investment ivg institutional funds 12,204...

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