Colliers International has carried out research into retail units in the Warsaw’s office buildings. The study covered approximately 300 buildings and a survey was carried out on a sample of 200 employees. Colliers experts asked respondents about their expectations about the quality of the retail and service units in their workplace and what they have available at present.
Currently, over half a million people work in approximately 500 modern office buildings in Warsaw, spending often more than eight hours a day in them. The low unemployment rate means that employers are competing with each other for talent, so staff-friendly offices are a motivational element for potential workers.
“The trend to change working space and the business environment will strengthen, which will have a positive effect on the demand for office space and the quality of developments. A derivative of that is that retail units in office buildings are increasing and diversifying,” says Katarzyna Michnikowska, Associate Director, Research and Consultancy Services at Colliers International. “Canteens are not enough. Today’s office buildings offer not a wide range of eating options, cafes, grocery stores or newsstands, but also fitness clubs, medical centres, car washes and laundries”.
Growing demands of employees
Only 30% of respondents were satisfied with the shops and services in their workplaces. Despite catering being fairly well-developed in office buildings, a large group of respondents would like canteens with simple, good quality meals at an affordable price. Lack of choice and high prices were also underlined by workers. Fitness clubs and grocery stores were often listed among expected amenities. Respondents expect a larger range of health and beauty salons – women need pharmacies and drugstores and men would like more hairdressers. The survey showed that people working in Warsaw’s office buildings also want better access to clothing and accessories stores.
Offer and rents
Over a half (60%) of the office buildings in Warsaw offer retail and service space, although 80% have a surface area that does not exceed 2,000 sqm. In the vast majority of buildings, a maximum of 10 units is planned. The largest retail and service space can be found in Plac Unii, Koszyki, Royal Wilanów, Millennium Plaza and Europlex.
In terms of the tenant mix, caters are the largest group accounting for 33% of space. Second place is taken by financial institutions (13%) and third place goes to services (10%). The food and health & beauty sectors are quite strong and take 10% and 9% respectively. It is worth noting that the tenant mix by sector differs depending on the office district.
Rental rates for retail space vary widely and depend on the location and prestige of the building. The highest rental rates are achieved for the ground floor units of the best office buildings on main high streets (€35-55/sqm monthly). There are a few cases where expected rents fluctuate at around €100/sqm monthly. Rents in office buildings located near transport hubs are in the range of €20-25/sqm monthly, while in office buildings with retail and service space for employees and local residents, prices are up to €15/20 sqm monthly.
Developers are focusing on mixed-use
There are not many mixed-use office and shopping centres in the Warsaw market – only 9%. However, the situation is beginning to change.
“The retail map of Warsaw is changing. Recently, we have seen a new trend to increase the retail space in new office buildings and investment in mixed-use buildings. This trend is seen mainly in the city centre,” says Katarzyna Michnikowska.
Large retail units in office buildings are a relatively new phenomenon in the Warsaw commercial real estate market. At the design stage, developers are increasingly allocating space for retail, services and catering. Examples of this type of investment are currently under construction and include: Varso, CEDET, Centrum Marszałkowska and The Warsaw HUB.
In 2018 in Warsaw, approximately 40,000 sqm of retail space across nearly 45 office buildings are due to be delivered.
