Wrocław saturated with retail space, but with prime office shortage

Wrocław has the highest saturation in retail space among Polish cities, but its class A office stock is limited, as evidenced by low vacancies in that segment, a report by advisory CBRE said. Wrocław’s retail space saturation remains one of the highest in Poland, at 505 sqm per 1,000 residents. The city has 605,000 sq m of retail space within 20 schemes (15 shopping malls, four retail parks and one outlet center). Third generation shopping malls make up 34 percent of the total space, while retail parks and outlets stand for 26 of the retail supply. The remaining 40 percent is split almost evenly between first and second generation shopping malls. Some 59,000 sqm of retail space are under construction and a further 140,000 sqm is at the planning stage. “The vacancy rate remains relatively stable in Wroclaw (4.5 percent) and is associated primarily with older locations. Due to the gradual growth in the supply of new retail spaces, rental rates in new shopping centers have been stable over the last few years and will remain so throughout 2014. In the retail segment, the prime rents reach EUR 45-50 per sqm per month,” said Beata Kokeli, senior director of Retail department in CBRE. The south-western city’s vacancy rates in class A office space is at a mere 6 percent, while vacancies in the entire office stock amount to 11 percent as of the end of June 2014. Wrocław has a total of 560,000 sqm of office stock, which makes it the third largest office market in Poland, after Warsaw and Kraków. A further 144,000 sqm is currently under construction within 15 projects, most of which are expected to be completed in 2015. Once delivered they will increase office supply by 26 percent, which is expected to push vacancy figures higher. Prime office rates now stand at €15 per sqm per month, roughly 7 percent lower than in 2012. “Wroclaw is the third largest market for the SSC/BPO sector, following Krakow and Warsaw. Companies from this segment generate the highest demand for offices in Wroclaw and we expect this trend to continue due to the growing significance of Wroclaw on the outsourcing map of Poland. This increase in importance will be accompanied by growth in employment and a greater demand for new spaces,” said Paweł Boczar, senior property negotiator at the Office Agency Team, CBRE Wroclaw. “Wroclaw has also advanced to 65th place in “Tholons Top 100 Outsourcing Destination Locations” – 10 places higher than in 2013,” Boczar added.