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RESEARCH WARSAW OFFICE MARKET Q1 2017 Warsaw tenement houses restored A modern take on history and unique architecture

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RESEARCH

WARSAWOFFICE MARKET Q1 2017

Warsaw tenement houses

restoredA modern take on history

and unique architecture

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2

Between January and March 2017, six office schemes were delivered to the Warsaw market, i.a.: the next stage of the Business Garden complex (54,800 sq m in total, Vastint Poland), Eqlibrium (9,900 sq m, Grupa Waryński), Airtech Business Park III (6,700 sq m, Juma). Consequently, at the end of Q1 2017, the total office stock in Warsaw exceeded 5.12m sq m.

After the record-breaking new supply noted in 2016, in Q1 2017 developers approached new projects carefully. Since the beginning of 2017, only two developments have been started - the acknowledged project Rotunda PKO (3,300 sq m, PKO Bank Polski) and the Vector building (13,500 sq m, City Level) located in the north of the city. Nevertheless, developers remained very active with some 662,000 sq m under construction at the end of Q1 2017. If the projects under construction are completed in line with the developers’ schedules, new supply in 2017 may amount to 241,000 sq m. By the end of this year projects such as West Station II (36,900 sq m, HB Reavis), D48 (26,000 sq m, Penta

OFFICE MARKETIN WARSAW

Investments), Bobrowiecka 8 (22,000 sq m, Spectra Development) or Generation Park X (21,400 sq m, Skanska Property Poland) are due to be delivered to the market. Simultaneously, substantial tenant activity has still taken place in Warsaw. In Q1 2017, take-up reached almost 194,000 sq m. The volume of leased space was nearly 40% higher than in the same period of 2017 and only 12% lower than in Q4 2016. The new lease agreements in existing buildings and schemes under construction accounted for 46% and 8% respectively. Renewals represented some 37% of total take-up and expansions accounted for 9%. High tenant activity was also reflected by the high net absorption, which in Q1 2017 amounted to 86,000 sq m and was 60% higher than the average quarterly net absorption noted within 2012-2016.

In Q1 2017, the vacancy rate was stable in comparison to the last quarter of 2016 and accounted for 14%, while the vacant space amounted to 718,000 sq m. The vast majority of vacant space was offered in the central part

Source: Knight Frank

Central Służewiec Mokotów Aleje East Other zone Jerozolimskie

CHART 1Supply under construction by location and planned completion dateQ1 2017

20182017 2019

400 000

350 000

300 000

250 000

200 000

150 000

100 000

50 000

sq m 0

M76, Raiffeisen Capital Management

Total stock:

5.12 sq m

New supply (Q1 2017):

84,000 sq m

in 6 projects

Office space uder construction

662,000 sq m

Take up (Q1 2017):

194,000 sq m

Vacancy rate:

14%

Q1 2017 saw: Stable vacancy rate Strong demand for office space High net absorption

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3

Source: Knight Frank, PORF

Central Służewiec Mokotów Aleje East Other zone Jerozolimskie

CHART 2Total office stock and vacancy rate by location Q1 2017

Vacancy rateTotal stock

2 500 000

2 000 000

1 500 000

1 000 000

500 000

sq m 0

Cen

tral

zone

Słu

żew

iec

Mok

otów

East

Ale

jeJe

rozo

limsk

ie

Nor

th

Puł

awsk

a

Urs

ynów

, W

ilanó

w

Wes

t

Żwirk

i i

Wig

ury

30%

25%

20%

15%

10%

5%

0%

of the city – 258,000 sq m and in Służewiec – 200,000 sq m. It is worth mentioning that a significant decrease of vacancy rate to 13.1% was noted in central zones of the city in the last quarter (2.1 pp. down when compared to the end of 2016).

Asking rents have remained stable in most office buildings. Asking rents in the prime buildings in Central Business District ranged between EUR 19-23 per sq m per month, while asking rents in other central locations varied from EUR 13 to EUR 21 per sq m per month. Asking rents in buildings outside the city centre were quoted at EUR 10.5-18 per sq m per month. Effective rents remained lower than the asking level by 15-25%.

North Gate, DEKA Immobilien

Mokotowska Square, DEKA Immobilien

RESEARCHOFFICE MARKET IN WARSAW

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4

The Warsaw office market has been growing dynamically

over recent years with developers’ offers becoming

more varied and made to measure the individual tenant’s

preferences. This trend is a especially apparent in the city

centre where many boutique projects are being developed

right next to large-scale tower investments. Renovation of

the historic properties has also gained momentum. From

all of the completed investments only 2% of Warsaw’s

office stock are spaces located in the renovated tenement

houses. Altogether, there are about 20 buildings of this

type with a total area of 93,000 sq m. Three new projects

of this type offering almost 13,000 sq m of space will be

completed in 2017. However, the market in Warsaw is

ripening while developers are trying to fulfil the needs of

various groups of tenants, even with contrary preferences.

Therefore, we can expect the office space offer to became

even more diversified in the upcoming years. Legal

counsellors, bookkeeping companies or designer firms

choose offices in the renovated tenement houses thanks to

their smaller and friendlier spaces. Below we present some

of the new projects (completed in the last couple of years

or still under construction) which combine modern office

interiors with sophisticated architecture.

Warsaw tenement houses

restored

1. Małachowski Square 2 Małachowski Sq.2. Renaissance Building 19 Mokotowska St.3. Smolna 40 40 Smolna St.

4. Polna Corner 40 Polna Str./Waryńskiego St./ Jaworzyńska St.5. Poznańska 37 37 Poznańska St.6. Europejski 13 Krakowskie Przedmieście St.

COMPLETED

UNDER CONSTRUCTION

1

2

3

5

4

6

A modern take on history and unique architecture

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RESEARCH

5

STYLEARCHITECT

BUILT IN

A tenement house (1884) designed for the Krasinski family according to the project of Franciszek Maria Lanci. Deconstructed in 1907 to make room for the residence of count Raczynski (who married the widow of the writer Zygmunt Krasinski). At first, the family was supposed to keep their collection of books and works of art in the building (The Library of Krasinski Ordination). Eventually, the property was rented to wealthy individuals. The ground floor held many shops. During the interwar period, the building housed the female gymnasium (grey uniforms) founded by Janina Tyminska. A nuclear bunker is located beneath the old wing of the building – a remnant of the official institutions located in the property after the war.

2010-2013

14 600 sq m

1907-1910

Modernized classicismJan Heurich (author of i.a. the City Library in Koszyko-wa Street)

RENOVATION

AREA

An office-service building. The historic facade of the building together with the large glass windows on the ground floor were reconstructed as part of the renovation works. The historic entrance to the building was preserved, while a new wing was built in the back of the property (via the Academy of Fine Arts).

PROJECT OFFICE

OWNER

KANA – Andrzej i Barbara Kaliszewscy and Bohdan Napieralski

Europa Capital and White Star Real Estate

MałachowskiSquare

STYLEARCHITECT

BUILT IN

The tenement house was owned by Bronislaw Pawlowicz – master of the stonemason’s guild. He educated young stonemasons and introduced new technologies to construction. Back in the day, stonemasons in Warsaw built in ‘the style of Pawlowicz’.

2004, 2016

5 300 sq m

1895-1896

Neorenaissance Teofila Lembke

RENOVATION

AREA

An office building awarded by the Construction & Investment Journal in the Best Office Investment 2004 category. The historic façade and elements of the original elevation were restored. In 2016 the tenement house was fully renovated and the facade modernized. During the Warsaw Uprising the te-nement house burned down, but between 1946-1947 it was rebuilt, a storey lower and without balconies.

PROJECT OFFICE

OWNER

JJ. ORY

GLL

Renaissance Building

OFFICE MARKET IN WARSAW

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Office building (40 Polna Street): 1916Tenement house (Jaworzyńska Street): 1913

BUILT IN

Before World War II the office building at 40 Polna Street formed part of an urban quarter. It was later cut in half with the newly built Warynskiego street opened after WW2. At the beginning the property was 3 storeys high (the front building and two transverse annexes). In 1916 two storeys were added to the building. At the turn of the 1970s and the 1980s the building was reno-vated and the eastern annex was deconstructed. The edifice lost its original character. Only the arrangement of windows and the gate survived.

The writer Maria Dabrowska lived in the tenement house designed by Andrzej Kondracki for 37 years and she wrote many of her novels in the building including the famous Nights and Days. Jan Dąbrowski, the first Marshal of the Polish Sejm in Communist Poland, also lived in the building. The Society for the Care of the Blind was located in the property. The edifice survived the war and its front façade is currently a registered monument.

2015-2017

Office building (40 Polna Street) – 2,000 sq mNew office building (Waryńskiego Street) – 5,200 sq mTenement house (17 apartments from 53 sq to 160 sq m)

RENOVATION

AREA

Three buildings will be constructed as part of the project: a new class A building (at Warynskiego Street), an office building in the XX century edifice which will be renovated (at Polna Street) and the renovated historical tene-ment house at Jaworzynska Street (Maria Dabrowska’s apartment) which will regain its pre-war charm.

PROJECT OFFICE

OWNER

B’ART Pracownia Architektury Urbanistyki i Wnętrz

Polna Sp. z o.o., Grupa CERACO

Polna Corner

STYLEARCHITECT

BUILT IN

A tenement house designed for Ksawery Branicki and his family. Destroyed during the war, the building almost collapsed and was set to be deconstruc-ted. The team of Cultural Heritage Protection Society of Warsaw stopped that process. The edifice was rebuilt in the 1950s and was officially registered as a monument in 1988. During the war, Adam Branicki (son of Ksawery) was buying out prisoners and provided a safe haven for people searched for by the gestapo in his apartment at 40 Smolna St.

2014-2016

4 500 sq m

1901-1903

Eclectic, an exemplary tenement houseBronisław Brochwicz-Rogojski (author of i.a. the PAST-a building)

RENOVATION

AREA

A class A building with a hotel-office-service profile (the Indigo Warsaw Nowy Swiat hotel will open in the building in Q2 2017). The original building façade was renovated and the mansard roof was reconstructed as part of the reno-vation works.

PROJECT OFFICE

OWNER

Kulczyński Architekt

Budizol

Smolna 40

6

Office building, 40 Polna Street

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STYLE

ARCHITECT

BUILT IN

Designed by the acclaimed Polish architect of Italian origin – Henryk Marconi, it was opened in 1857 under the name Hotel d’Europe and was the most luxurio-us hotel in Warsaw for decades. During War World II, it was almost completely destroyed. In 1948, the Bierut Act took the hotel away from the family company H.E.S.A. In the years 1949-1951, the hotel was rebuilt according to Bohdan Pniewski’s project: the historic façade and interior were renovated. From 1951 to 1954 the Military Political Academy had its seat in the building. In 1962, the hotel was re-opened for guests as part of the national network of travel bureaus and hotel Orbis. After many years of struggle, the righteous property owners regained the building in 2005. The Europejski hotel was completely modernized from 2013 to 2017.

2013-2017

7,000 sq m of office space and 2,700 sq m of retail--service space

1855-1857

Neo-renaissance facade with elements of Italian rena-issance Henryk i Leonardo Marconi

RENOVATION

AREA

The Europejski was brought back to its former glory according to the strict regulations of the restorer. The building will house not only an 5-star hotel, but also a prestigious office, boutique and gastronomy spaces. Offices, equipped with two independent receptions, will be located on the 4th and 5th floor. 103 rooms and apartments, a 700 sq m spa, swimming pool, conference centre, restaurants, bars, a cigar lounge, 80 parking lots in the underground carpark and 120 around the building will be made available to the guests. The materials and technologies used are of the highest quality. The renovated Europejski combines tradition with the 21st century architecture.

PROJECT OFFICE

OWNER

SUD Architectes Polska, WWAA, APA Wojciechowski

Hotel Europejski S.A - H.E.S.A

Europejski

STYLEARCHITECT

BUILT IN

Poznańska 37 – adapted into a friendly office building is a historical tenement house from the year 1904 and one of the rare edifices which did not suffer during the II World War. The writer and poet Miron Bialoszewski lived at 37 Poznanska St. He moved in right after the war and stayed in the building until 1958.

2015-2017

4 000 sq m

1903-1904

The decor has many references to Renaissance forms and art nouveau motives

RENOVATION

AREA

The building famous for its rich pre-war history will be adjusted to fit modern--day requirements and offer a total of 4,000 sq m of office and retail-service space as well as a three-level underground car park in the very centre of Warsaw. Poznanska 37 is a unique combination of comfortable offices and access to the wide variety of restaurants and shops on the famous Poznanska Street which it also forms.

PROJECT OFFICE

OWNER

FS&P ARCUS

Icon Real Estate/Poznańska 37 SPV

Poznańska 37

7

RESEARCHOFFICE MARKET IN WARSAW

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