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The Warsaw Voice » Real Estate » May 31, 2012
The Real Estate Voice
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New Prospects for Polish Retail Sector
May 31, 2012   
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Poland is expected to see a further increase in the supply of modern retail space in the coming years, with development activity concentrated in smaller cities.

Last year was a good time for the Polish market for shopping centers. Poland ranked third in Europe in terms of the growth of retail space in newly built shopping centers, according to a report by real estate services company Cushman & Wakefield.

Among the largest retail premises completed in 2011 is Millennium Hall in the southeastern city of Rzeszów and Galeria Kaskada in the northwestern city of Szczecin. There were 368 shopping centers in Poland at the end of December 2011, of which 344 were traditional premises, which covered around 8.1 million sq m in total. It is estimated that they accounted for 93 percent of modern retail space in Poland. Retail parks, with around 540,000 sq m, accounted for 6 percent of the total supply and factory outlet centers, with around 121,000 sq m, accounted for 1 percent.

The supply of retail space rose only slightly in Poland in the first quarter of 2012—by only 89,500 sq m. Five new premises were completed and three existing ones were expanded. Most of the space, 61,000 sq m, was developed in cities with populations below 100,000. The Alfa shopping center in the northern city of Grudzi±dz, developed by JWK Invest, was the largest facility completed in the first quarter. Among the other newly built centers was Galeria ¦widnicka in the western city of ¦widnica, Galeria Starówka in the northwestern city of Stargard Szczeciński and Galeria Pruchnicka in the southeastern city of Jarosław. The expanded premises were Magnolia Park in the southwestern city of Wrocław, Galeria Szperk in Kosaków, outside the coastal city of Gdynia, and Galeria Wenus in the southeastern city of ¦widnik.

Experts from the Polish Council of Shopping Centers (PRCH) expect a stable growth in the supply of modern retail space in 2012-2013 at 500,000-600,000 sq m annually. At the end of 2011, over 740,000 sq m were under construction, of which 39 percent in cities with populations below 100,000 sq m. It is expected that tenants’, developers’ and investors’ interest in the development of modern retail space in smaller cities will not subside.

Research conducted by real estate services company Jones Lang LaSalle also shows that the highest activity is in smaller cities, where 68 percent of all newly developed retail space was delivered in the first quarter of 2012. Several foreign shopping chains announced at the beginning of 2012 theirs plans to start operations in Poland. These include the German chains KIK, NKD, Maxi Zoo and Bonita, Russian footwear chain Kari, Portuguese chain Lanidor, and Latvian chain Attirance.

Turkish chain LC Waikiki will soon open its first store in Poland. It will be located in the Silesia City Center in the southern city of Katowice. Fashion retailer H&M wants to open its first Collection of Style (COS) store in Poland. It will be located in Warsaw. Additionally, eatery chains Nordsee, Iceland Foods and Belgian Beer Café also plan expansion on the Polish market in 2012.

Analysts at Jones Lang LaSalle expect that around 445,000 sq m of new retail space will be delivered to the market this year. At present around 755,000 sq m of space is under construction, with new premises accounting for 87 percent of the total. The remaining space is being built in existing shopping centers as expansion projects. Most of the new space—62 percent—is still being built in small and medium-sized premises. The highest activity is still observed in the largest cities, at 45 percent, and in cities with populations below 100,000, at 38 percent. The lowest activity is now in cities with populations between 200,000 and 400,000. Most of these markets are now almost saturated.

The further development of the market for shopping centers in Poland will largely depend on the country’s economic situation and consumer demand as well as on activity within the retail sector itself. The business success of a shopping center and retail chain depends on a combination of factors. These include relations between the tenants and the company managing the center, detailed economic analysis, and consumer trends.

Participants in a conference organized by the PRCH at Warsaw’s Hilton Hotel in May—PRCH Retail Horizons—talked about ways of achieving success in the business. More than 300 retail chain executives took part in the conference. A.R.
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