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Warsaw Office Buildings Embrace Retail and Services as Demand for Pure Commercial Space Dwindles

REAL ESTATEWarsaw Office Buildings Embrace Retail and Services as Demand for Pure Commercial Space Dwindles

Already 64% of office buildings in Warsaw offer at least one service and retail space – according to the “Retail @ Office” report prepared by experts from the international consulting firm Cushman & Wakefield. The low supply of new, purely commercial space in Warsaw compels retail chains and service providers to look for alternative locations. Meanwhile, the last few years have brought many changes in user preferences regarding the use of office space and the type of services available in office buildings. According to analyses by Cushman & Wakefield:

  • 6% of space – that’s the average in Warsaw occupied by service and retail premises in office buildings.
  • 87% of commercial-service premises are located on the ground floor, which emphasizes their strategic placement for maximum visibility and accessibility.
  • 390,000 sqm in 1400 premises across more than 360 locations – that’s the resource of service and retail space in office buildings in Warsaw as of the end of 2023.

The City Center and Central Business District (CBD) together concentrate more than half of all commercial premises in office buildings, with the CBD having the highest saturation of commercial-service space in office buildings – over 1.5 sqm per person.

Service and retail spaces in office buildings are gaining popularity. In newer projects, they already make up even 7% of the space. This is influenced by changes occurring in the urban fabric related to the evolution of the needs of office users and residents of Warsaw districts, the trend of creating multi-functional spaces, and the shrinking resources of available land in key business locations.

In Warsaw, the stock of modern commercial space (excluding stand-alone retail warehouses and spaces in shopping centers occupied by large-scale grocery hypermarkets) is 1.2 million sqm across 45 locations. However, in the last two years, only 37,000 sqm have been delivered.

Given the unavailability of space in shopping centers, tenants are looking for other locations, and their attention naturally turns towards premises in office and residential buildings. Located mostly on the ground floor of office buildings, these spaces create service and retail zones increasingly open to external traffic. Analyzing data on trade in office buildings, we focused on Class A and B buildings but excluded mixed-use projects, which have a slightly different specificity,” explains Ewelina Staruch, Retail Market Analyst, Cushman & Wakefield.

Everything Close By

Changes in the work model, particularly noticeable in the capital, have influenced user preferences regarding the use of offices and the type of services available in the building. In the report “Office or Home? What Attracts Poles to Work in an Office,” Cushman & Wakefield presented conclusions from a study analyzing practical user behaviors and their expectations related to workspace design.
Respondents indicated that as many as 45% of them use the gastronomic zones in the office building at least once a month, 1/3 also pointed out the service offer, and nearly 30% mentioned fitness clubs. Employees also frequently use relaxation areas, such as gardens, benches, or sun loungers – 36% of respondents answered this way,” says Ewa Derlatka-Chilewicz, Head of Research, Cushman & Wakefield.

This confirms the results of an earlier survey conducted by Cushman & Wakefield in 2022 among office managers. The most important service they identified was a restaurant/canteen (67%). Other top services included: ATM (43%), grocery store (30%), café (21%), and package lockers (19%).

All these choices indicate the direction that office building owners should follow to gain a competitive edge and create a vibrant facility full of tenants,” adds Ewa Derlatka-Chilewicz.

55,000 sqm Available

Although on average in Warsaw, commercial-service space occupies 6% of an office building, for facilities commissioned in the last 10 years, this is already 7%. While in 2013 such premises were in 60% of office buildings, by the end of 2023 this was already 64%. Experts at Cushman & Wakefield estimate that this share will further increase by 2025.

The highest concentration of commercial space in business centers is observed in the CBD, Służewiec, and the City Center. However, it is worth noting that in the Strict City Center we also speak of the smallest premises – averaging just over 200 sqm. The highest average premises size, oscillating around 400 sqm, is offered in the West office zone,” explains Magdalena Gniazdowska, Leasing Manager, Retail Agency, Cushman & Wakefield.

Currently, 257 commercial-service premises in Warsaw office buildings remain unleased, totaling 53,000 sqm, or 18.2%. For comparison, in shopping centers and retail parks, the vacancy rate is 9.3%. The most unleased commercial-service space is found in the

newest office buildings, commissioned between 2020-2024. As many as 157 available premises offer space ranging from 100 to 500 sqm, which limits the range of potential tenants.

The majority of premises currently available for lease in the market do not exceed 500 sqm. One of the key challenges for office building owners is to meet tenant needs and fill the deficit of large premises. Retail brands actively seeking spaces larger than 500 sqm encounter a very limited offer. This results from low supply and high occupancy, and consequently a low level of vacancies. Only 8% of vacant premises currently available on the market can be classified as large or largest (over 500 sqm),” adds Ewelina Staruch.

The highest level of vacancies, considering their area relative to the total stock, occurs in the East (28.4%) and Służewiec (21.9%).

Office Buildings as an Extension of Shopping Streets

As per the report by Cushman & Wakefield, trade in office buildings is dominated by gastronomy (26%) and services (22%). Interestingly, these locations are also frequently chosen by medical centers (105 facilities, or 9%), as well as grocery stores (7%).

We can talk about the synergy of the offerings of business districts and shopping centers. However, it should be noted that in the latter, there is definitely more from categories such as fashion, health and beauty, home furnishings, or electronics. Such stores usually require larger spaces than those available in office buildings and prefer higher foot traffic, especially, or rather primarily, on weekends,” says Ewa Derlatka-Chilewicz.

The authors of the report indicated that there are currently 806 unique retail brands in office buildings in Warsaw, with the TOP 6 with the most premises being: Żabka, Gorąco Polecam, Zdrofit, Green Caffe Nero, Rossmann drugstore, and Lux Med.

We see the evolution of trade in large cities, especially in Warsaw. We are also observing a gradual rebuilding of interest in shopping streets. Commercial-service spaces in office buildings represent a development or complement to this concept. It is worth noting that rents for these premises in the best office locations today amount to 50-60 EUR/sqm, while in shopping centers we are talking about even 150-170 EUR. Of course, a downside to trade in office buildings is lower turnover on weekends, the lack of large-scale proposals, and difficulties in maintaining an aesthetic compromise between office and commercial buildings. However, convenient location and customer profile can compensate for these inconveniences,” concludes Magdalena Gniazdowska.

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