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The Warsaw Voice » Real Estate » September 24, 2008
The Real Estate Voice
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A Market in Transition
September 24, 2008   
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Patrick Delcol, president of the Polish Council of Shopping Centers (PRCH):

In the last few years, the Polish retail real estate market has been characterized by a transition from the hypermarket-mall type of developments to trendier shopping center type of products, in parallel with an unprecedented retail consumption boom. Shopping center developers are gradually becoming committed towards secondary and tertiary cities, and are moving away from potentially saturated primary cities to secure an exclusive position in markets with still substantial catchment areas.

In the last few months Polish retail projects-such as Z³ote Tarasy, Stary Browar, Galeria Krakowska and Manufaktura-have won an impressive number of awards in international competitions and fairs. Developers delivered high-quality-oriented projects, integrating entertainment, culture or arts into the usual retail/fashion function of shopping centers. Despite this international recognition for recent Polish shopping center quality products, developers had to cope with a few local barriers and difficulties in their normal daily business development. These included the substantial absence of proper city master plans and the effects of the large-scale retail center act that was eventually declared unconstitutional in July this year and annulled. Yet another problem was the lack of sufficient support from city authorities to the economic role of the global retail world in inner city development and redevelopment, accompanied by the lack of efficient legal tools, such as private-public partnerships (PPP), to enable such projects. The cancellation of the large-scale retail center law brought back optimism to the sector about its future potential growth.

Meanwhile, the credit crunch and starting recession in some Western European countries will have effects on the local Polish market.

In the near future, the Polish retail real estate market will become more complex, and still more professional, with a higher finesse required from developers to deliver projects adapted to ever more requiring consumer expectations. With consumers' wealth growing, attitudes towards the act of shopping, the shopping experience, will evolve as this has been the case in Western European countries. Shopping for fun, convenience shopping or compulsive shopping may be performed at different times, and therefore separate or not from each other in terms of location. Shopping centers, which tend to present sometimes similar brands or retail mixes as a result of globalization, will go through rebranding, redevelopment or may simply disappear. New international and Polish brands, whether mid-level or high-end ones, will appear on the market step by step. A few projects in the pipeline today may not get off the ground because of today's credit restrictions, competition and the limit of expansion imposed by anchor retailers in some tertiary or secondary city areas. At last, revised PPP legal tools should allow city authorities to commit much more efficiently towards core city center redevelopment with the support of retailers and retail developers, which goes in the long-term interest of the city inhabitants, the local economy, society, the next generations and the environment. Last but not least, the click business (e-commerce) will not stop growing. It should take over a large part of some retail segments over the next few years. Shopping will have to adapt to that new tool and change of habits.
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