Office rental market in Warsaw in 2022 - LIM Center commentary

According to reports, a total of 479,400 square metres of office space was rented in Warsaw in the first half of 2022, a historic half-year record. This represents a year-on-year increase of 94%. The result is a clearly noticeable drop in the number of available office vacancies, particularly in the central zones.

As a result, some experts are already discussing the return of the boom in the Warsaw office market.

In parallel, the supply gap resulting from low developer activity is expanding. By June 2022, around 300,000 square metres of new office space was under construction, and this is the lowest figure since 2010. There are plenty of indications, therefore, that the market is entering a new dynamic that will be challenging for both tenants and lessors.

We asked LIM Center's CFO Tomasz Pijanka for his opinion on the first half of 2022 at LIM Center.?

The first six months at LIM Center has been somewhat stagnant, but it should be noted that this is a safe stabilisation at a very high level of the building's occupancy. We have observed neither increased traffic or demand, nor an increased desire to vacate.

What were the reasons for these results? Has the war in Ukraine been a significant factor?

There have been predictions that the war in Ukraine may generate customers if only because Ukrainians will massively move their businesses to Poland. It is difficult to evaluate other players' experience in the market, however, we do not observe any interest on the part of Ukrainian companies towards the LIM rental segment.

What do you think the next half of the year will look like for the office market in Warsaw?

I would not be overly optimistic. The forecasts look good for relatively small spaces for short-term rental. Demand for larger spaces, ranging from 300-700 m2, may not be high, however.

What are the factors behind this forecast?

An important factor is the aforementioned supply gap. The relatively small increase in available space can be considered somewhat optimistic. On the other hand, however, trends and behaviours triggered by the pandemic persist. Here I refer to the quite frequent or even widespread remote working. Quite a few companies have switched to this work mode to the extent that they may not return 100% to desktop work. The natural result is cost optimisation in companies by reducing office space.

Thank you very much for the interview.