More and more catering and services, and less shops in Warsaw

25 November 2019

Undeniably, popular shopping malls attract with a rich retail and service offer gathered under one roof. However, as the shopping centers market matured in our country, tastes and expectations of customers have also changed. Today, popularity of downtown areas and high streets is growing again, as they provide an increasingly attractive and diverse offer. Not only the main pedestrian zones and high streets in the city are popular, but also modern commercial complexes emerging in the business zones, with space for various purposes and interestingly developed recreational areas around the buildings.

Shopping centers vs high streets and mixed-use facilities

Implementation of large, mixed-use buildings and revitalization of the former factory buildings is also usually associated with the development of the surrounding urban areas, which are enriched with new squares and places for relaxation and leisure. In this way, new commercial and service locations are created in Warsaw, and the development of urban planning in the city is conducive to the diversification of the commercial market. In addition to over 50 shopping malls located in the agglomeration, smaller, interesting retail and service formats appear, which are also eagerly visited by locals and tourists.

It is Warsaw's streets that provide the widest range of food establishments and entertainment in the city, unlike the retail offer, which is primarily concentrated in shopping centers. - In Warsaw's shopping malls, food premises still occupy only a few per cent of the area, and together with services, a dozen or so per cent. Catering facilities dominate mainly on the most representative streets and city promenades, like Nowy Świat, where over a half of all premises constitute cafes, restaurants and bars - informs Bartłomiej Zagrodnik, Managing Partner at Walter Herz.

- In Nowy Świat, space for catering industry and services leases very fast. Recently, we have assisted in the process of selecting premises and negotiating terms of lease for two clients who have decided on this location. We were looking for premises for the recently opened, third Charlotte restaurant in Warsaw and a place for bar entertainment center - Zagrywki, which will be opened by the creators of Warsaw’s Hangar 646 trampoline park in a three-storey premises with 1500 sq m. in the building on 4a Nowy Świat street- lists Bartłomiej Zagrodnik. He adds that in Warsaw, Świętokrzyska, Krakowskie Przedmieście, Chmielna and Poznańska streets are also popular among tenants from the catering industry.

Shops mainly in malls

In turn, there are few clothes shops in the streets of Warsaw. They currently occupy only a dozen or so per cent of the total lease area. However, they dominate in shopping malls. Real competition for shopping centers is only Mokotowska street, which attracts the most fashionable designs and the area of Plac Trzech Krzyży and Teatralny Square, with world's most luxurious brands. On the other hand, the share of services in the rental volume is growing rapidly both in shopping malls and high streets.

The mixed-use facilities emerging in the capital, which in addition to offices, are designed for extended catering and shopping, as well as service zones, such as Hala Koszyki or Centrum Praskie Koneser, are very popular among clients, as well as investors and tenants. These locations have become hot Warsaw addresses, while contributing to stimulation of activity in their immediate surroundings.

Among the office investments, the arrangement of which confirms the clearly visible tendency on the market related to the design of space for various functions and supplementary infrastructure, there are Varso Place complex, Elektrownia Powiśle, Browary Warszawskie, ArtN, The Warsaw HUB and Bohema, as well as Roma Tower and Towarowa 22 projects which are at the stage of preparation. The emerging facilities will join the earlier Warsaw projects of this type, such as Plac Unii, Royal Wilanów, Millennium Plaza, Europlex, CEDET or Centrum Marszałkowska.

New locations for catering and entertainment

- Such carefully designed projects are not only interesting as work places, but also set new standards for the development of catering and services, becoming fashionable locations for fun, leisure and spending free time. Modern office buildings, which today also provide complementary infrastructure, offer more and more retail and service space. Already at the design stage, they arrange space for retail, services and catering industry. On Warsaw office market, which today has 5,6 million sq m. of resources, over 350 thousand sq m. of space is intended for service purposes. About 60 per cent of capital office buildings provide such space - informs Bartłomiej Zagrodnik, Managing Partner at Walter Herz.

- One-third of retail and service space located in office buildings is allocated for catering industry. There are about 550 different catering establishments, restaurants, bars and cafes in Warsaw office buildings. The service space is usually located on the ground floor of the buildings, but it can also to be located on the top floors of tall buildings. The flagship example of such Warsaw venue is The View rooftop bar located in Spektrum Tower office building located on Twarda Street, where we assisted in the process of leasing space. More restaurants with the view are soon be open on the top floors of Varso Tower and Skyliner office towers, currently under construction in Warsaw – says Bartłomiej Zagrodnik.

However, as Walter Herz expert admits, space in office buildings is also often leased by fitness clubs, kindergartens, financial services, as well as beauty salons, clinics and retail.

Today, real estate developers provide well-developed service-related support infrastructure in every new office building in Warsaw. A similar tendency also applies to shopping centers. According to Walter Herz, in shopping malls, which in total currently occupy over 14 million sq m in Poland, more and more space is also allocated for catering industry and services as well as entertainment, at the expense of commerce.

Rental rates

Retail space on the main streets in Warsaw can already be leased for the amount of EUR 20/ sq m./ month, for example on Aleje Jerozolimskie street west of the Central Railway Station. However, for 90 sq m of premises in Nowy Świat street one has to pay around EUR 90/ sq m. a month.

A slightly lower level of rental rates applies in office buildings, where prices of retail and service space, depending on the location and prestige of the facility, range from EUR 35 to 55 per sq m. a month. The highest valued is retail space in premises located on the ground floors of the most renowned office buildings, situated at the main high streets in Warsaw. In such complexes rates reach up to EUR 100 per sq m./ month. In office buildings distant from the center, one can lease commercial space from  EUR 15 per sq m. a month.

According to Walter Herz, current vacancy rate for retail and service space on Warsaw's high streets, oscillates around 12 per cent and it is dropping.

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