|Function:||Director of Property Management Department|
Nearly half of Warsaw's office buildings is at least 10 years old. In order to appeal to potential tenants, they have to be upgraded.
A considerable 48 percent of Warsaw’s office space is at least 10 years old. Still, older office buildings can retain their appeal to tenants – Agnieszka Krzekotowska, Property Manager, Colliers International, argues. One of their assets is that they are usually well-located, with convenient access to public transport. However, without investing in upgrades the owners of these buildings will have a hard time competing with the latest projects. No wonder, then, that almost half of Warsaw’s older office facilities have already been upgraded or are undergoing upgrades.
“The current Warsaw market offers nearly 5.3 m sq. m of office space. In 2008, this figure was at 2.5 m sq. m. So, this means that about 48 percent of offices in the Capital City is ten or more years old,” Agnieszka Krzekotowska, Director of Property Management Department at Colliers International, said in an interview with the Newseria Biznes news agency.
According to Colliers International data, in 2017 alone, a total of 27 new office buildings were accepted for occupancy, meaning extra 275,000 sq. m of available office space. Moreover, a further 810,000 sq. m of office space is under construction.
The reason why 10-year-old buildings are old enough to be considered “older” buildings in Warsaw is that Warsaw’s market is still relatively undeveloped. For comparison, an average office building in the US and Western Europe is 50 and 30 years old, respectively. According to Krzekotowska, however, older buildings continue to be popular among tenants.
“Older buildings are usually well-located, with good access to public transport. Also, they are supported by good infrastructure,” Agnieszka Krzekotowska argues.
Good location is the reason why older buildings are often preferred to newly built facilities. Moreover, they often have the advantage of lower rents and greater flexibility in negotiating lease terms. In order to successfully compete for tenants with new buildings, however, their owners have to ensure tenant comfort by adapting the buildings to the latest trends and expectations. The immediate surroundings are important as well.
“Providing buildings with cycling facilities, including cycle tracks and bicycle parking infrastructure complete with changing rooms, is now a standard. Access to auxiliary services, such as car wash and laundry/dry cleaning facilities. This will give them a sense of being taken care of, encouraging them to stay in the building,” Krzekotowska explained.
So, many office buildings in Warsaw have been recently renovated. Notable examples include the G9 N21, Platinum Business Park, Horizon Plaza, R34, RTO, Norway House, 134 Chmielna and 54 Koszykowa, and, not least, the Warsaw Financial Center, which was awarded the LEED Gold certificate in the Existing Buildings category following its upgrade.
“At Colliers, we have about 1 m sq. m of surface area, not only office space, but also show, logistics and retail space, under our management. Nearly half the office space which is 10 or more years old has been or is being upgraded. In some cases, these are minor works, such as renovations of communal areas and lobby remodels. Then, there are some major projects involving utility diversion works and the addition of new systems, bringing the building in line with the latest market trends and positioning it to compete with the latest projects,” Agnieszka Krzekotowska argued.
The Warsaw market provides about 5.3 m sq. m of office space. In 2008 the figure was 2.5 m sq. m, so this means that about 48 percent of the existing office space is 10 or more years old.
These buildings continue to be popular with our tenants. Some of them decide to stay at locations they know and like, and that are known by their clients. Older buildings are well-located, with good access to public transport and infrastructure in the surrounding area, so they continue to be appealing to potential tenants.
Clearly, you have to stay competitive towards these new buildings, you have to be more flexible and consider their appearance, which must be up-to-date to draw the attention of tenants, and they have to offer superior tenant comfort. We often consider adding new facilities and services to give the users of these properties a sense of being taken care of. Toilets and changing facilities for bikers, cycling infrastructure and cycle tracks have become a standard. We’re also thinking about providing car washes, laundries/dry cleaning facilities, in essence, everything with the potential to give the building users a sense of being taken care of and to encourage them to stay.
Currently, we have about 1 m sq. m of surface area, not only office space, but also show, logistics and retail space, under our management. As of now, about 50 percent of Warsaw’s office space which is 10 or more years old has been or is being upgraded. In some cases, these are minor works, such as renovations of communal areas and lobby remodels. Then, there are some major projects involving utility diversion works and the addition of new systems, bringing the building in line with the latest market trends and positioning it to compete with the latest projects.
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