Madison International Real Estate Liquidity Fund VI has taken a 50 percent stake in the Warsaw Spire office tower, becoming an equal owner alongside the Ghelamco GP12 fund.
The value of the tower is approximately €350 million ($424 million).
The high-profile building is located in the new business district of Warsaw at Rondo Daszyńskiego. Warsaw Spire is the tallest office building in Central Europe, spanning up 722 feet on 49 floors. It totals 694,272 square feet of office space. It is more than 95 percent let to a strong lineup of international tenants including Samsung, JLL, Mastercard, Shire, The Heart, Daftcode, Panattoni and Ghelamco.
Warsaw Spire has been Ghelamco’s flagship development in Poland. It was awarded with the Best Office & Business Development title at the prestigious MIPIM Awards 2017.
Madison International Real Estate Liquidity Fund VI closed in 2016 with $1.24 billion in equity commitments.
The acquisition is one of the country’s largest office real estate transactions in recent times.
“Warsaw is cementing its place as the center for business activity in the CEE region,” said Anna Młyniec, head of office agency and tenant representation at JLL. “This in turn is a powerful lure for both investors and occupiers and has resulted in bullish forecasts for the next few quarters. Established companies are continuing to expand their footprint in the capital and will carry on fuelling demand for office space. This, coupled with a wide range of newcomers to the market, further enhances growth forecasts and boosts tenant activity in Warsaw. Occupier activity totaled 2.2 million square feet during the first quarter 2018.
The Central Business District (CBD) leads the way in terms of total demand followed by Mokotów. Together they account for 75 percent of the total demand for offices in the capital.
The growing maturity of the capital office market is accompanied by the evolving needs and interests of tenants. Currently two major trends are attracting the attention of both landlords and occupiers: the increasing role of property technology and the rise of the flexible working environment.
“We recognize a growing demand for technological solutions dedicated to office buildings,” said Tomasz Trzósło, managing director, JLL. “These include integrating virtual or augmented reality services, which helps to draw in new tenants. An interesting solution is the concept of heat mapping employee movements, which allows for optimizing floor space and adapting to a changing workforce. Innovations are also key to the increasing importance of flexible working environments. This is underlined by the recent decision of Cambridge Innovation Center (CIC) to start operations in Warsaw and to focus on start-ups, corporate innovation initiatives and building a ‘Warsaw-based innovation community’. New technologies have changed the face of the office market, and we can be sure that technology will continue to help shape the offices of the future in the next few years.”
The amount of new supply coming to the market during the first quarter 2018 was rather moderate: two buildings were completed — Graffit and Europejski — which provided the Warsaw market with 255,00 square feet of office space.
The lower completions volume and the robust demand during the first quarter resulted in a drop in the vacancy rate in Warsaw to 10.8 percent. This decrease is most evident in central Warsaw, where 7.3 percent of space is empty. The vacancy rate in non-central Warsaw remained stable at 13.1 percent at the end of the first quarter 2018.
Prime headline rents remained stable during the first quarter 2018. In central Warsaw rents are currently quoted at €17 to €23/sq m/month ($21 to $28/sq ft/month), while prime assets located in the best non-central areas lease for €11 to €15/sq m/month ($13 to $18/sq ft/month).
