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The Warsaw Voice » Real Estate » March 5, 2008
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Retail Space Market
March 5, 2008   
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Krzysztof Giemza, head of the Shopping Center Department at Echo Investment:

Poland's continuing economic growth, stable market development and decreasing unemployment, coupled with rising wages and consumer spending, stimulate the expansion of companies already present here and attract new brands to the market. Demand for modern retail space is still on the rise, driven by the fast expansion of existing shopping chains, the introduction of new retail concepts and the entrance of foreign companies into Poland. Developers are planning new projects to meet market expectations.

According to a Knight Frank report, around 317,000 sq m of retail space is now under construction in Warsaw and the main regional cities. Some 80 percent of this space should be completed by the end of 2008. Premises with another 900,000 sq m of retail space are at the planning stage and are scheduled for completion by 2010. This shows clearly that the market is not slowing.

Although the market for modern shopping facilities in the largest cities will soon reach saturation-this is particularly true of Warsaw-there is still room for interesting projects in good locations. The future belongs to multi-functional facilities of the "city within a city" type, with sophisticated architecture blending into the surroundings. Such premises combine shopping and entertainment with sporting, cultural and educational functions, and are important centers for the local community. The markets in Poland's largest cities will continue to expand over the next few years, but at a slower rate than recently.

Development activity is still most visible in the largest urban centers, but smaller regional cities are attracting more and more interest. Investment pressure is largely generated by leading domestic and foreign shopping chains, whose development strategies are increasingly focused on medium-sized cities. In cities whose populations range from 100,000 to 250,000, the supply of modern retail space is now insufficient to meet both the needs of tenants and the expectations and purchasing power of local residents. As a result, Echo Investment's new projects are underway in Słupsk (Arena), Łomża (Galeria Veneda), Kalisz, Koszalin, Lublin and other smaller cities. The shopping center in Kielce is being expanded. Demand from prospective tenants is huge, as illustrated by the fact that almost 95 percent of space in Arena, the largest shopping and entertainment center in Słupsk, has already been rented out, a year before its planned opening.

This demand for modern space in medium-sized cities is driving investment on the retail property market. Contrary to opinions voiced by skeptics, there are no signals indicating a slowdown in this sector in the near future. High investor demand for completed premises also proves that the condition of the market is favorable.
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