Project: office What every tenant should know about the Warsaw office market in 2017
www.axiimmo.com Office map with buildings under construction – Warsaw (Q1 2017)
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Żoliborz
Praga-Północ W E 38 Nowa Praga 34 S
Powązki 25 36 Koło Stare Miasto
39 4 Bemowo Praga-Południe Śródmieście 31 27 17 3 24 29 Wola 28 2 1 35 30 5 6 8 Saska Kępa 16 9 7 26 11 13 10 Odolany Filtry
Łazienki Ochota Królewskie Pole Mokotowskie
12 23
Wyględów Mokotów 32 33 14 15 20 Sadyba Okęcie 21 18 22
WŁOCHY
19
Służewiec
Stokłosy
37
1 Universal 12 Grójecka Offices 23 Bobrowiecka 8 34 Centrum Praskie Koneser
C, O, P, H 2 Cedet 13 West Station II 24 Proximo II
35 Zwycięzców 2 3 Centrum Marszałkowska 14 Artico 25 Vector+
36 Praga 306 4 Ec Powiśle B1, B4, B5 15 Ocean Plaza 26 Eqlibrium
37 Poleczki Business Park III 5 Varso 16 Warsaw Hub 27 Wronia 31 bud. Madrid
6 Ethos 17 Świętokrzyska 36 28 Generation Park X Phase I 38 Słonimskiego Art Office 7 Park Avenue 18 Graffit 29 Mennica Legacy Tower 39 Hotel Europejski 8 Poznańska 37 19 P4/A 30 Skyliner
9 Nowogrodzka Square 20 Business Liner 31 Spark A
10 Polna Corner 21 D48 32 Business Garden V, VI, VII
11 Equator IV 22 Villa Metro 33 The Park Warsaw C1
1 Project: office
In Q1 2017, 84,000 sq m of new office space was delivered as it being an employee market are producing a need to to the Warsaw office market. This result increased the total create attractive working environments, which should be volume of office space in the capital to nearly 5.12 million taken into account at the very beginning of the process of square metres. Developers are still active and building finding a new office. In this article, we highlight the most new projects. The boom is continuing and it is definitely a important data and trends that will help you get an idea of tenant market. At the same time, office tenants are facing the situation in the Warsaw office market. We hope that it new challenges posed by the labour market. Generational will help you exploit the favourable market situation at a change, the increasing importance of millennials as well time of increasing requirements regarding office space.
2 Stock OFFICE MARKET OVERVIEW 5.12 mln. sq m The situation
New supply in the office market in Q1 2017 84,2 favours tenants thous. sq m
Supply is at a record level Demand in Q1 2017 197 thous. sq m The total stock of office space in the capital is 5.12
million square metres. In Q1 2017, 84,000 sq m of new
office space was delivered to the Warsaw office market,
the result of 2016 year was 420,000 sq m. The largest Under construction investments completed last year include Q22 (46,400 700 sq m, Echo Investment) and Warsaw Spire – building A thous. sq m
(59,100 sq m, Ghelamco).
Investments are not slowing down Stable absorption of office space
The high level of activity among developers ongoing for The demand for office space in Q1 2017 reached a level of
several years has made the capital not only the largest almost 197,000 sq m. The high level of absorption remain
office market in the country (60% of the total volume stable taking into account fact, that the total demand
of office space), but also the most attractive in terms of during the whole 2016 was 750,000 sq m. The largest
the quality and diversity of space available. At the end of lease transactions in Q1 2017 include: a renewal and
the Q1 2017 over 700,000 sq m of modern office space expansion of Astra Zeneca in building Postępu 14 (13,200
was under construction. To the most interesting office sq m) and pre-let contract for Diebold Nixdorf w West
buildings under construction in Q1 2017 joined Varso, Station II (9,800 sq m). For comparison, in 2016 the largest
in the vicinity of Warsaw Central Railway Station. A transactions included contract for the construction of a
230-metre office tower topped with a 80-metre spire will new headquarters of BGŻ BNP Paribas with Yareal and the
the highestamong this type of projects in Poland and CEE lease of office space in Q22 by Allegro.
region.
3 Vacancy 14.1%
Rents Center (CBD) 19-23 Vacancy rate € / sq m
At the end of March 2017 the vacancy rate in Warsaw
reached 14.1%. This is an increase of 2 p.p. compared
to the end of 2016, but at the same level compared to Rates outside CBD the corresponding period of previous year. A growth of 13-17 € / sq m vacancies during this year is predicted due to numerous
speculative investment in Warsaw. The market has a stable
level of absorption and newly built office buildings are
particularly popular.
Incentives for tenants Rents on a downward trend offered by property Rents in the city centre remained stable during the Q1 owners 2017, while in older buildings they showed a downward
trend. Average rates in the centre remain at a level of 19 rent holidays to 23 EUR/sq m, while in other locations the cost ranges financial packages for arranging from 13 to 17 EUR/sq m. Due to the high level of supply, space developers are willing to negotiate and they are offering a wider range of rent exemptions and packages for space free parking spaces arrangement than they gave 3-4 years ago. one-time cash bonuses to cover moving costs
tenant redemption, i.e. paying outstanding obligations under the current contract
4 CHANGES IN THE LABOUR MARKET Generation Y is presenting new challenges for employers
Record low unemployment
In January 2017, the unemployment rate in Poland was
8.7%, which is the lowest January unemployment rate in Unemployment 2.8% in Warsaw the last 26 years. In the same month in Warsaw, the level of unemployment was 2.8%1.
Number of graduates 243thous. in 2016
Candidate market Staff spending more than 50 8% hours a week in the office Competition for staff is increasing, especially in the
business services and IT sectors. The problem affects
The average time spent at work all levels of employment. Moreover, the forecasts are h in Poland during one year 1963 not optimistic for employers: the number of students
and university graduates, potential office workers, are
The percentage of people declining. In 2011, the student population in Warsaw was 68% dissatisfied with their work space 270,000, while five years later this was only 243,0002. An attractive workplace can provide a competitive edge
when looking for staff in these new market conditions. The percentage of employers that 49% have a problem with the outflow of talent
1 Source: GUS - 01.01.2017 2Source: GUS - 01.01.2017
5 Millennials in the cross-hairs Increasing number of hours spent in the office In the coming decade, generation Y (those born in the years 1983-2000) will constitute 75% of people in working 1963 hours – this is how long the average Pole spends age. Companies looking for new employees will have to in the workplace during the year. This result puts us in meet the distinctive needs of this group. Development 7th place (among 38 countries) in the OECD ranking4. opportunities, work-life balance, a good working What’s more, this figure has been increasing for the last environment – these are the elements of an employer’s two years. Putting thought into the working environment image that generation Y is interested in. The Gallup State and creating a friendly atmosphere in the company plays of the Global Workplace report shows that only 17% of an important role in attracting and retaining employees. employees in Poland are satisfied with the place where An attractive workplace provides a competitive edge. they work, and more than 68% believe that they don’t Many companies decide to incorporate rest and fun have adequate conditions for effective group or individual zones, which raise the satisfaction and creativity of the work3. Office tenants, apart from cost factors, should team. The extent to which the office is seen as attractive therefore analyse the functionality of an office so as to for employees depends, however, on the character of better adapt the space for the success of the company. the company. Therefore, the search for suitable office
For millennials, it is not only important how they work, space should be preceded by a thorough answer to the but also where they work. question: “what do we need?” According to a survey by
Antal Market Research, as many as 49% of employers are
affected by the problem of losing talented employees5.
Given this high rate, more and more decision makers
in companies are beginning to see the importance of
working conditions in the battle for talented staff. Staff deficitis in Warsaw (office staff)6
website developers and administrators
ICT system operators
financial and investment advisors
construction engineers
finance and accounting staff with foreign languages
quality control staff
telephone and electronic workers customer service, marketers, tele-marketers
sales representatives
3 Source: Report State of the Global Workplace 2012-2013, Gallup 4 Source: OECD statistics 5 Source: Antal Market Research 2016 Outflow of employees from organisations 6Source: Barometr zawodów 2017
6 Frequently asked questions Office project in a nutshell
When to start to renegotiate Where and how to search for an office or search for a new office? that meets your criteria?
Any moment is a good moment to start the “office project”. The total volume of office space in Warsaw is currently
The ideal situation is when the tenant starts the process in 60% of the volume in the whole country, and 720,000
the middle of the current contract. Then there is time to sq m delivered space is free for tenants immediately. With
carefully analyse needs and market conditions. As a rule, other projects also under construction, there is a lot to
however, tenants start the process later. Practice shows choose from. Służewiec enjoys the greatest interest from
that office space can always be found; however, the earlier tenants, who are drawn to the area by attractive rental
you start looking, the greater chance you have of finding rates. New developments are still being built there – at
something best suited to the company’s needs in terms of the end of 2016 over 150,000 sq m of office space was
functionality and cost. Considering whether to renegotiate under construction. Investments located on the edge of
or relocate earlier, without time pressure, also allows you to the city centre and in Wola near Rondo ONZ and Rondo
avoid unnecessary stress for managers and the whole team. Daszyńskiego are becoming increasingly popular. Indeed,
Our market experience shows that preparing adequately most new office space is being built in Wola – over
for a renegotiation or relocation allows real savings and 230,000 sq m including 94,000 sq m within Skyliner. In
efficiency increases to be achieved. the coming years, we can expect a natural migration of
developers to areas of the city less crowded by business,
for example Praga. The path there has already been
beaten by Koneser Praga Center. Although businesses are
attracted to good locations, it is worth taking into account
less popular locations. In addition to lower rental costs,
they often have other advantages such as additional useful
functions (shopping, services, entertainment) or fewer
problems for staff to get there.
7 How to organise the arrangement of a new office?
Contrary to common belief, this stage is the most difficult.
Arranging a new office doesn’t just mean ordering a new set of furniture and office equipment. It is a complex undertaking requiring expertise and experience. Difficulties How to successfully implement can arise at the implementation stage along with required change in a company? permits, agreements and opinions. It is necessary to take into account restrictions resulting from construction, An office is a space where people work. Staff want to fire safety EHS laws as well as appropriate supervision decide about the appearance and arrangement of the and coordination of the work of subcontractors. Proper place where they spend most of the day. The success of organisation and harmonisation at an early stage of the “project: office” depends not only on good planning construction, installation and finishing work will lead to the and good decisions by decision-makers, but also on the success of the project. This also gives a sense of security, participation and involvement of staff. The change that guarantees that everything will be completed on time and results from moving or reorganising office space will be allows unnecessary costs to be avoided. successful only if staff take an active part in it.
How to properly identify the needs of the company and employees?
When you analyse the office needs of your company perhaps less prestigious location, but with the ability
you need to consider three basic aspects: function, for the interior to be adapted flexibly and creatively.
image and cost, and for each of them the common Law firms are a different group of tenants. From their
denominator is location. A consideration of these point of view, more important is the prestige of the
three aspects is the starting point for defining the building and the location, i.e. the image aspect. These
criteria for a new office. For example, a company are only the simplest examples of identifying the
focused on fast employment growth should opt for needs in a new office. In reality, the needs analysis is
functionality and adapting the space to the needs of more complex and requires extensive knowledge in
employees, using it as a part of its employer branding. economics, marketing and sociology.
The solution is to find office space in a cheaper and
8 TRENDS Arrangement of modern office
Office full of light Activity Base Workplace
Office space should be arranged to provide maximum Activity Base Workplace means balance way of planning
exposure to light. To this end, openwork partitions and the office space. Open space yes, but with places to focus.
glass rather than walls are used, thus increasing the Today’s model for working in an office requires a pulse
effectiveness and positive attitude of staff. approach to tasks. Staff sometimes need time for individual
work, while other times they need a place to meet in the
group. That’s why modern workplace planning strategies
include communication, concentration and administration Innovative IT solutions zones. Also needed are smaller spaces and quiet zones as well as space for formal and informal cooperation. A modern office should also feature pioneering technical
solutions. This doesn’t have to affect the appearance of
the office, but it provides comfortable working conditions
and access to company data from anywhere.
Modern ergonomics
No assigned desks and abandonment In addition to being able to adjust the height of the monitor of hierarchy or chair, modern workplaces also feature desks designed for work both standing up and sitting down, as well as
By breaking the tradition of having individual work with moving parts. Having the right furniture shows that
stations, the hierarchy disappears, which stimulates the the company cares about the health of its staff and that is
creativity and innovation of employees. It also increases adapts the space to their individual needs.
the efficient use of office space, thus saving money.
9 Selected office projects under construction – Warsaw
1 2 3 Equator IV Generation Park X Mennica LT
Tatal space: 25 thous. sq m Tatal space: 21 thous. sq m Tatal space: 65 thous. sq m
4 5 6 Skyliner Varso West Station II
Tatal space: 94 thous. sq m Tatal space: 140 thous. sq m Tatal space: 35 thous. sq m
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Praga-Północ
Nowa Praga W E
Powązki Koło Stare Miasto S
Bemowo Praga-Południe Śródmieście
3 Wola 2 4 5 Saska Kępa
1 6 Filtry Odolany Ochota Łazienki Pole Królewskie Mokotowskie
10 Contact
Axi Immo Group Renata Osiecka ul. 18 Twarda St., 00-105 Warsaw Managing Partner
+48 22 111 00 01 +48 601 295 533 [email protected] [email protected] www.axiimmo.com
Martin Lipiński Monika Rykowska Director – Head of Office Agency PR & Marketing Director
+ 48 602 175 701 +48 725 900 100
[email protected] [email protected]
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