According to Savills' latest report, Warsaw’s total office stock was 6.25 million sqm at the end of March 2023. Although there were no new office completions anywhere in the city in the first three months of the year, the capital’s development pipeline increased for the first time since the Covid-19 outbreak. The close to 230,000 sqm of new office space scheduled for delivery onto the Warsaw market is still well below the annual volumes of 700,000-800,000 sqm recorded in 2016-2019.

Development activity in the coming years is expected to continue to focus on the city centre. Office projects in central locations account for 65% of the development pipeline. Office completions scheduled for completion in Warsaw by the end of 2023 amount to close to 68,000 sqm, of which over 42% has already been pre-let. In the most optimistic scenario, if all the planned projects come to fruition, the total new supply is likely to surpass 140,000 sqm in 2024, followed by another 290,000 sqm in 2025.

“2023 looks set to be a year of service charge growth driven by high inflation and rising utility costs. The economic downturn is forcing tenants to take a more cautious approach to office leasing. Looking ahead, we are in for a period of tough renegotiations and increased sublease availability again. We are also likely to witness optimisation strategies such as office downsizing and relocations, albeit paradoxically sometimes to more costly locations - closer to the city centre and of better quality, which will encourage employees to return to the office,” says Daniel Czarnecki, Head of Office Agency, Landlord Representation, Savills.

Despite rising service charges, occupancy costs in Warsaw remain stable. According to Savills data, prime office rents are currently in the range of €22.5-25.5/sqm/month in the most prestigious locations in the Centre, with rents in Służewiec holding firm at €13-15/sqm/month. At the end of March 2023, office availability in Warsaw amounted to close to 725,000 sqm, equating to a vacancy rate of 11.6% - a level it has been at for some time.

Total office take-up in Warsaw for January-March 2023 climbed to 158,900 sqm, down by around 40% compared to the same period last year and close to the previous quarter’s level. According to Savills, new leases and relocations accounted for almost 68% of the total leasing activity, with expansions making up 5%; economic uncertainty and the scarcity of office stock under construction saw pre-lets fall to 2%.

Office deals for over 1,000 sqm accounted for 70% of the total take-up in the first quarter of 2023, with five transactions for more than 5,000 sqm signed in the period. Demand for office space was relatively evenly distributed across industries, albeit business services (20%) was the dominant occupier sector. IT saw its share of total take-up fall from around 15% to just 6% - one of the lowest levels in recent years.

“Serviced and coworking offices are likely to be another way of getting through a difficult time or reorganising working models completely. They are increasingly being considered not only by start-ups but also by leading IT or financial companies. This has recently led flex operators to step up activity in Warsaw,” says Jarosław Pilch, Head of Office Agency, Tenant Representation, Savills, and Head of Workthere Poland.

Going forward, flexible office providers in Warsaw are planning to open four new locations and expand one to deliver a combined flex stock of over 14,500 sqm. The largest coworking spaces in central Warsaw will be located in Skyliner (Mindspace, 4,400 sqm), Lixa (Loftmill, 3,300 sqm), Warsaw UNIT (OmniOffice, 3,200 sqm), and outside the city centre - in Wilanów Office Park (Regus, 3,100 sqm).