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The Warsaw Voice » Real Estate » May 14, 2008
Modern Retail Space
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Time for Smaller Cities
May 14, 2008   
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Renata Kusznierska, DTZ director for Central Europe:

The total area of modern retail space in Poland today is some 7.6 million square meters. This is made up of shopping malls in city centers and third- and fourth-generation malls as well as retail parks, discount centers and traditional supermarkets and hypermarkets. Currently, 75 percent of all retail facilities are located in eight of Poland's largest cities and urban areas: in Warsaw, ŁódĽ, Cracow, Wrocław, Poznań, Szczecin, Katowice and the Upper Silesia region, and the Gdańsk-Sopot-Gdynia tricity area. Last year in Poland developers added 825,000 square meters of new retail space, of which over 40 percent (341,000 square meters) is located in mid-sized and smaller cities in terms of population. A further 930,000 square meters is planned for 2008, of which 59 percent will be located away from the largest city areas. In the following years this trend will be even more visible: 1.6 million square meters of new retail space is in the pipeline for 2009, of which 65 percent will be in mid- and small-sized cities and towns. A further 1 million square meters is planned for 2010, of which 62 percent will be located outside the largest cities.

Over the past two years or so developers have shown an increased interest in mid-sized cities and towns. This about-turn toward development in second- and third-tier cities, with some 100,000 and 50,000 inhabitants respectively, is the result, on the one hand, of gradual market saturation in large cities and, on the other, an unrelenting demand for modern retail facilities in smaller towns. This demand is itself the result of shopping-center expansion and consumer needs. On a global scale, geographical expansion is boosted by positive economic trends and continuous improvement in consumers' financial status, which stimulates consumer spending in smaller cities. The result is that the retail network in Poland is growing. After regional capitals, the time has come for smaller cities, many of which offer major development potential. For example, after investing in Wrocław, developers have targeted Legnica, Wałbrzych and Zielona Góra; after carrying out projects in Poznań, they have set their sights on Kalisz and Ostrów Wielkopolski; after Lublin, they have gone to Zamo¶ć; and after Rzeszów, they have focused on Przemy¶l. New retail projects are cropping up in most of Poland's mid-sized cities: Płock, Tarnów, Opole and Koszalin are each the location of four new projects; Słupsk is hosting three new projects, and Włocławek is home to two. These cities will not only have excellent, centrally located shopping malls, but will also have plenty of retail facilities in their outlying districts close to national roads. Most these projects involve small outlets of some 15,000-30,000 square meters in area, with the focus on stores that stock well-known Polish and international brands, with less emphasis on entertainment and leisure facilities. During the next two years, the supply of retail space in smaller cities is expected to run at an especially high level. The question is how the law on the establishment and operation of large retail centers will impact on this growth.
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