More retail at offices

Faced with the shortage of space in shopping centres, retailers are looking for alternative locations and shifting their focus towards units in office and residential buildings. Retail and service zones which are mostly located on the ground floor of office buildings are increasingly attracting external footfall. Our analysis of retail in office locations focuses on A- and B-class buildings, and excludes mixed-use schemes that are slightly different in nature,” 

explains Ewelina Staruch, Retail Market Analyst, Cushman & Wakefield.

The survey has revealed that 45% of respondents use F&B facilities in an office building at least once a month, a third opt for services, with nearly 30% going to fitness clubs. In addition, 36% of respondents use breakout spaces such as gardens, benches or deckchairs, the survey found,” 

says Ewa Derlatka-Chilewicz, Head of Research, Cushman & Wakefield.

All the above choices appear to indicate a direction in which office landlords should go in order to gain a competitive advantage and to create a vibrant office building accommodating plenty of tenants,” a

dds Ewa Derlatka-Chilewicz.

The highest concentration of retail space in office hubs is the CBD, Służewiec and the City Centre. However, retail stores in the City Core are also the smallest, averaging just over 200 sq m. The largest units of around 400 sq m on average are in the West office zone,” 

explains Magdalena Gniazdowska, Leasing Manager, Retail Agency, Cushman & Wakefield.

A vast majority of units for rent are less than 500 sq m in size. A major challenge facing office landlords is how to respond to tenants’ needs and to ease the shortage of large premises. Retailers actively looking for units of more than 500 sq m have a very limited choice due to constrained supply and high occupancy levels, and subsequently low vacancy rates. Only 8% of unoccupied units can be classified as large or very large, i.e. more than 500 sq m in size,” 

adds Ewelina Staruch.

There is some synergy between the offers of business districts and shopping centres. The latter are, however, mostly anchored by fashion, health and beauty, homeware and electronics retailers. Such tenants generally require larger units than those available in office buildings and are after higher footfall levels also - or perhaps above all - at the weekend,” 

says Ewa Derlatka-Chilewicz.

Retail evolution is happening in large cities, particularly in Warsaw. We are also seeing interest in high streets pick up momentum. Retail and service space in office buildings constitutes an extension of or an addition to high street retailing. It is also worth noting that market rents for such space in prime office buildings stand at EUR 50-60 per sq m, compared to EUR 150-170 in shopping centres. There are, of course, some drawbacks to retailing in office buildings such as lower weekend turnover levels, the lack of large spaces and difficulties with maintaining an aesthetic compromise between office and retail buildings. However, these disadvantages appear to be well compensated by a convenient location and a customer profile,” 

concludes Magdalena Gniazdowska.