Tenant activity in the first quarter of 2022 reached a level unprecedented in this period on the Warsaw office market. Lease agreements were signed for almost 273.2 thousand sq m. sq m, which proves that many transactions withheld, inter alia, by the pandemic has been finalized. Companies were most interested in central locations, where almost 213.1 thousand sq m was leased. sq m., which constitutes 78 percent. total demand in the analyzed period.
High demand is the result of signing several significant lease agreements. The observed disruptions in supply chains, an increase in the costs of labor and construction materials, and the ongoing conflict beyond our eastern border will certainly affect the condition of the Polish economy, as well as the office market. We anticipate delays in the implementation of investments and space arrangement, as well as an increase in the construction costs of new office buildings and the cost of finishing offices - explains Joanna Bartosiewicz, senior associate in the office tenant representation department, Newmark Polska.
At the end of the first quarter of 2022, the total stock of space in Warsaw amounted to almost 6.24 million sq m, and the new supply exceeded 93.4 thousand sq m. sq m During this time, a total of six new office buildings were commissioned. The largest completed investments include: Forest Tower (51,500 sq m, North Centrum), Lixa C (19,400 sq m, Zachodnie Centrum) and SkySawa I (8,500 sq m, Central Area Business).
The volume of space under construction remains at one of the lowest levels in the history of the Warsaw office market. Currently, less than 260,000 jobs are being built. sq m, of which almost 80 percent. is to be put into service by the end of 2023, which means that the supply gap forecast for 2024-2025 is slowly becoming a fact - says Agnieszka Giermakowska, director of the market research and consulting department, Newmark Polska.
From the beginning of January to the end of March 2022, new lease contracts accounted for 27.7 percent. share in the demand structure, renegotiations and renewals - 26.8%, and pre-lease contracts - 24.5%. total volume. On the remaining 21 percent. it consisted of expansions (13%) and transactions for own needs (8%). Particularly noteworthy is the marked increase in the share of expansion contracts, which in the entire 2021 amounted to just over 6%.
The most active on the Warsaw market in the first quarter of 2022 were companies from the financial (49%) and IT (17.2%) sectors. The largest contracts signed were two pre-let: PKO BP for 34.5 thousand. sq m in the SkySawa complex and an anonymous tenant from the banking sector for 30 thousand. sq m in Forest Tower.
At the end of March 2022, the vacancy rate in Warsaw amounted to 12.2%, which is a decrease of 0.5 pp compared to the previous quarter and an increase of 0.8 pp year-on-year. According to forecasts, the amount of available office space in the capital will gradually decrease due to the supply gap forecast for the coming years. The increase in office construction and use costs (mainly due to media price increases) may translate into greater tenants' interest in locations outside the city center.
In the first quarter of 2022, there was a pressure to increase rents in the Warsaw office space market. At the same time, owners of office buildings were limiting incentive packages, especially in locations with the lowest vacancy rate.
