Time to talk shop

These days, when planning a new office building, space is nearly always reserved on the ground level for retail along with a few restaurants and cafés, because it is regarded as a major selling point to potential tenants if their employees can nip out to the shops or lunch during breaks. However, there are some offices that don’t have just a cosy café or a convenience store on the ground floor. Some have actual shopping centres in their buildings.

Globalworth, although predominantly an office investor, is also the owner of buildings that have a large retail component, such as Hala Koszyki in Warsaw and Renoma in Wrocław. “We believe that our unique and highly specialised range of stores in each of our mixed-use projects that contain retail, food and other services plays a vital role in the overall perception of the building by our office tenants,” insists Maciej Gołębiewski, the asset management and leasing director of Globalworth Poland. The same could be said of the Blue City complex in Warsaw. This has around 19,000 sqm of office space with app. 60,000 sqm of retail. “I believe that there is a synergy and a symbiosis between the office complex and the retail and recreation sections. On the one hand, the company employees from the office section are regular customers of the retail and entertainment section, and on the other they have shops, cafés, restaurants, a medical centre and a fitness club all within arm’s reach. So you could say that this is for them a kind of fringe benefit – it makes life easier and saves time for them to do their shopping and sort out their personal matters. This convenience certainly has an effect on the loyalty of workers to their employers. For some years now, the Neighbour Project programme has been in operation between Blue Office and Blue City, which is a promotion available to the office workers. As part of the scheme they can make use of promotions and discounts within the shopping centre,” explains Yoram Reshef, the vice-president of Blue City. He also makes it very plain that the benefits for office workers from the retail section are significant: “The employees in Blue Office, the office section of Blue City, make natural and very loyal customers for the retail section. The come to the mall more often than other shoppers – it’s easier for them to find a little time during the day. They visit the centre at non-peak times and on days when there are fewer visitors, such as on weekdays, often during their breaks at work. They come when the footfall in the retail section is not as great as it is at weekends. They mainly make use of the restaurants, the services and the groceries, but they also visit the clothes, shoe and other specialist stores. The companies that lease space in Blue Office also need space for company events, team-building, training and catering, so they use the entertainment facilities as well as the wide range of restaurants and bistros in Blue City. For the employees in Blue City it is also very important that there is a free car park for them and their guests,” adds Yoram Reshef.

Something a little different

Blue City is also a project that Daniel Czarnecki, the head of landlord representation in the office agency at Savills, is very familiar with. As he recalls: “Our experience with shopping centre offices started with Blue Offices in 2016. We had to lease out the space vacated by a bank, which amounted to 10,000 sqm. And we succeeded. This opened up the way for us to work with Atrium European Real Estate, so we have a portfolio of all the buildings owned by the fund in Poland that have an office component, including such well-known projects as Atrium Promenada and Wars Sawa Junior. Our job is to expand the leasing team of AERE, which is focused on retail, and to provide them with the know-how for the office section. The needs of a retail tenant are different to those of an office tenant, which is why our partnership works very well.” When asked what kind of advantages shopping centres offer to office tenants, he gives the following explanation: “Shopping malls have excellent visibility with good access via public transport. People know these places. Secondly, another important advantage is the parking ratio, which is always very good in malls and is something tenants always ask about. Also, the office space in such centres quite often has the same height as the retail space – and this is normally higher than in normal office buildings. This provides enormous possibilities for non-standard fit-outs. And, lastly – and this especially goes for retailers – there is the possibility of placing your advertisements or pop-up stores next to the office space.” Although such offices are ideal for retailers and those who provide services directly to the public, such as high street banks, these aren’t the only types of tenants he mentions. “Sometimes retail tenants require both office space and retail space within the same premises. There are also companies that might do business with the mall, such as cleaning companies, security firms and those that need the parking space. If you have a large car fleet a shopping mall would be the perfect fit,” adds Daniel Czarnecki.

The above-standard height of the office space in Plac Unii in Warsaw is also believed by its owners to be one of its unique selling points. “Plac Unii is one of the few mixed-use buildings in Poland that combines office space with a wide range of retail,” claims Anna Szelc, the director of asset management at Invesco Real Estate. In 2022, after the modernisation of the first floor (which is now underway), Plac Unii will gain an additional 5,000 sqm of modern and environmentally-friendly offices with a ceiling height of over 5m. “It is very important for our tenants that they are able to provide the highest level of comfort to their employees, and part of this involves having direct access to the shopping and services in the centre, which contains a cross-section of stores from every segment. The two uses of our building complement each other and form an integral whole. In addition, office workers form a large part of the regular and loyal customers of the shopping and services section,” she points out.

A welcome shot in the arm for retail and offices

It’s hard to imagine how such a symbiotic relationship can be maintained when brick-and-mortar retail grinds to a halt. At the moment of writing this article, malls in Poland are still officially closed due to Covid-19, with only those stores deemed essential being allowed to operate during the current lockdown. This is despite the fact that the national roll-out of the vaccination programme appears to be picking up tempo, thus encouraging more people to believe in the imminent resumption of normality. “By the third or fourth quarter of this year, if there are no more lockdowns, I believe business will start getting back to normal again,” predicts Daniel Czarnecki of Savills, although he does qualify this by stating that what is regarded as normal has now changed. This is a sentiment echoed by Anna Szelc of Invesco Real Estate: “The number of vaccinations and the declining infection rate are prompting both employers and employees to gradually end or reduce their reliance on remote working. We have noted that more and more companies are returning to their offices. We are also making sure that our tenants feel safe in Plac Unii. The best example of this was when we obtained a safety certificate from the SGS international testing laboratory, which assessed all our office buildings – A, B and C – for their cleaning, disinfection and other Covid-19 procedures,” reveals Anna Szelc.

Despite all the disruption, it appears that this mutually beneficial relationship between offices and retail, in essence, has not changed. “To be honest, we haven’t seen any negative impact on the operations of the offices in such complexes as a result of the retail lockdowns. Of course, office tenants haven’t been able to use some of the amenities in shopping malls for some time, but I‘m unaware of any office tenants changing their minds about working in these types of buildings,” insists Daniel Czarnecki of Savills. And when Yoram Reshef of Blue City was asked what effect the closure of the retail section of his centre had had on the offices, he replied: “Not much, because there were fewer office workers. You’ve got to remember that in Blue City, except for during the first lockdown, the grocery stores and drug stores as well as certain services remained open, so the basic range was still available.” He, too, is looking forward to the lifting of the restrictions and expects business to return relatively quickly. “When the current restrictions on restaurants and entertainment have been lifted, we expect to quickly rebuild our footfall, all the more so because customers will be much more willing to visit shopping centres. I expect that the footfall and our tenants’ turnovers will return to normal in September. This, however, doesn’t mean that we are going to be able to quickly make up for the losses caused by the pandemic.” admits Yoram Reshef. This belief is also shared at Globalworth – that Covid-19 hasn’t destroyed the synergy between its retail and office businesses: “The lockdown affected both retail and office users due to the limited numbers of people in the buildings. However, it did not impact our leasing figures. Tenants like locations in mixed-used centres that offer their employees a wide range of amenities. Moreover, Hala Koszyki, Renoma and Supersam are all unique because their architecture is on a human scale, and they have excellent city centre locations and a great atmosphere – and this is what has made them a commercial success,” claims Maciej Gołębiewski. “The feedback we get from the tenants we work with,” emphasises Daniel Czarnecki of Savills, “is that having a shopping mall next to your office is a huge bonus for their employees. They make full use of the shopping facilities, such as the laundries and the food courts. Even at Savills, since we used to have an office in the Skylight building next to Złote Tarasy, many of our employees still talk today about the amenities they had there.”