We use cookies to make sure our website better meets your expectations.
You can adjust your web browser's settings to stop accepting cookies. For further information, read our cookie policy.
IN Warsaw
Exchange Rates
Warsaw Stock Exchange - Indices
The Warsaw Voice » Real Estate » September 28, 2012
The Real Estate Voice
You have to be logged in to use the ReadSpeaker utility and listen to a text. It's free-of-charge. Just log in to the site or register if you are not registered user yet.
Poland Attractive to Retail Chains
September 28, 2012   
Article's tools:

The Polish market for retail space has escaped the crisis intact. New projects are being carried out and existing facilities are being expanded and modernized.

The potential of the Polish retail market is confirmed by the 2012 edition of the How Global is the Business of Retail? report by leading global property adviser CBRE. Poland has for the first time made it into the Top 20 countries of most interest to global retailers, according to CBRE’s annual survey. The survey, now in its fifth year, maps the global footprint of 326 of the world’s top retailers (including store brands, supermarkets, restaurants and cafes) across more than 200 cities to identify trends in global retail expansion at national and local levels.

With 34 percent of all international retail brands surveyed already present on the Polish market, Poland moved up to 19th place in 2012 from 22nd position in 2011 among the countries most targeted by global retailers, benefiting from its robust economy—with GDP growth of 4.3 percent in 2011. At the end of 2011, the shopping center stock in Poland amounted to 8.8 million sq m located in 381 schemes, which puts Poland on a par with the region’s most rapidly developing markets of Russia and Turkey. When looking at countries most targeted by global retailers, Britain (56.7 percent) holds onto the first position in the rankings ahead of the United Arab Emirates (53.1 percent) and the United States (50.3 percent).

Among the world’s cities most targeted by retailers, London (55.5 percent) reclaimed the outright number one position after sharing the top spot with Dubai last year. London remains a key hub for retailers looking to expand into Europe. Warsaw (30.2 percent) is one of the big movers in the ranking, coming in 36th among the world’s cities, an impressive jump by 10 notches from a year ago, ahead of European capitals such as Amsterdam, Lisbon, Brussels or Budapest.

The CBRE report shows that the city of Almaty in Kazakhstan was by far the most sought after new location last year, with 18 new retailer entries. The cities of Moscow (11 new entrants), Kiev (nine) and Warsaw (six) were also key targets for retailers in 2011. Six new entrants into the Polish retail market in 2011 included the British women’s fashion retailer Dorothy Perkins (Złote Tarasy shopping center in Warsaw), another British value fashion retailer F&F (Blue City in Warsaw), the U.S. GAP clothing and accessories brand (Arkadia in Warsaw), the American Eagle clothing retailer (the first store to open soon), Foot Locker—offering sports shoes and clothing of several renowned brands (Arkadia in Warsaw), and the American toys retailer Toys’R’Us (Blue City in Warsaw). It is possible to expect some more newcomers in 2012, as Poland was also highlighted as a key expansion target for retailers in CBRE’s retailer expansion survey, with 33 percent of respondents stating they were targeting the market.

Interestingly, Warsaw was highlighted in the CBRE survey as a location enjoying strong popularity with international supermarket chains, with as many as 33.3 percent having at least one store in Poland’s capital. The only city in the world with a wider choice of international supermarket brands was Tokyo, where 38.9 percent of global supermarket retailers have a presence. This means that Warsaw, with a population of just over 2 million, has a wider selection of global supermarket brands than some of the world’s largest cities such as New York (22.2 percent of global supermarket brands present), London (27.8 percent), Moscow (27.8 percent), or Beijing (22.2 percent). This also shows that the supermarket retail segment in Warsaw and Poland is highly competitive—which creates a challenge for supermarket chains present in Poland, but benefits Polish consumers who can take advantage of attractive product and price offering.

Expansion on regional markets
The substantial activity of developers leads to retail chains becoming more interested in expansion, particularly with an eye to smaller towns. That’s why sector experts predict that the vacancy rate in the best locations will remain low. Some growth may be reported at older-generation shopping malls whose standard prevents them from competing with more modern centers. Rents in the coming quarter should not change significantly.

Seven smaller towns in central Poland have strong investment potential on the retail market, according to a report by Colliers International focusing on the untapped potential of smaller towns. The report reviews the retail markets of towns whose population ranges from 30,000 to 100,000. They are analyzed in terms of existing and planned supply of modern retail space and economic indices such as unemployment and the local population’s purchasing power. Pruszków, Otwock, Grodzisk Mazowiecki and Sochaczew are listed as the most attractive locations for new retail projects in Mazovia province. In ŁódĽ province, the towns with potential are Zgierz, Kutno and Wieluń.

Retail markets in smaller towns differ significantly among themselves in terms of stage of development and local conditions, which makes them rather hard to compare with any reliability. However, there are certain key factors that determine the success of a project planned in a given location. These include the attitude of the local authorities, infrastructure development, availability of land and the residents’ shopping habits. These are important factors that can make or break a project. A map of new “trade routes” could be the first step toward indicating places with high potential that can translate into a project’s success. “Such potential gaps are an interesting alternative to bigger cities that are already relatively well saturated with existing retail space,” says Dominika Jędrak, a director at Colliers International. “Smaller towns are a worthwhile option for investors who want to carve out a presence for themselves in new locations with bright prospects.”

The strong interest in investing in shopping centers is confirmed by data from consulting firm Cushman & Wakefield. The data shows that new retail space supply over the first half of 2012 was around 300,000 sq m of gross leasable area (GLA), increasing the total floorspace to 10.9 million sq m. Shopping centers accounted for the largest proportion, 73 percent, followed by large-scale stores and retail parks with 20 percent, outlet centers with 1 percent, and other retail facilities with 6 percent. Some 800,000 sq m of modern retail space is under construction, with a further 600,000 sq m at an advanced stage of planning and due to be completed by the end of 2014. The annual supply pipeline is likely to deliver around 500,000-600,000 sq m of modern retail space over the next three years.

The largest shopping centers completed were Korona Kielce, Nova Park Gorzów Wielkopolski, Alfa Grudzi±dz and the Sky Tower Wrocław shopping gallery. More than 30 percent of the shopping center development pipeline is set to open this year, the largest of which will be the 67,000 sq m GLA Europa Centralna retail concept in Gliwice, combining the formats of a shopping center and a retail park.

According to Jones Lang LaSalle, the average vacancy rate in shopping centers in cities with more than 200,000 inhabitants was 2 percent, but in the eight largest urban areas the rate was about half that recorded in cities of between 200,000 and 400,000 residents. Most of the vacant space was in cities where large facilities have appeared recently, such as in Toruń and Radom. Szczecin and Lublin are among the cities with the lowest vacancy rate at the moment.

More retailers entering Poland
At the beginning of 2012, several foreign shopping chains announced their 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 drugstore 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. Especially interesting is the situation in the cities of Bełchatów and Łomża, where work on two new shopping malls for each city is due to begin soon. Bełchatów and Łomża each have a population of around 70,000. The lowest activity is now in cities with populations between 200,000 and 400,000. Most of these markets are now almost saturated. However, cities such as Lublin and Bydgoszcz are still being targeted by developers.

Poland’s highest rents for retail space are in Warsaw, at 75-90 euros per sq m per month in prime locations, and the average in the capital is 30-45 euros per sq m per month. The shortage of vacant retail space in Warsaw is making the prices rise. In regional cities such as Katowice, ŁódĽ, Poznań and Gdańsk, the situation is different. Vacant retail space is available off hand there, and rents in prime locations range from 30 to 50 euros per sq m per month.

Magdalena Fr±tczak, Retail Director with CBRE Poland:
Poland is constantly progressing on the global ranking list of desired retail locations, and a visible effect of that is the growing presence of leading international retailers in Polish shopping centers and high streets. With an increasing purchasing power, strong domestic economy and growing retail sales level, reaching $3,000 per capita per annum, Poland is now seen as one of the few remaining markets with unsatisfied demand that should generate growth in terms of retail product offer, as well as investment in new retail properties. We are observing continued interest from top global brands regarding entry onto the Polish market. However, the prime shopping centers in the city of Warsaw which they want to target first are nearly fully leased. As a result, some renowned international retailers may decide to debut in other large cities in Poland, where space is still available, or wait for new retail schemes to be completed in Warsaw.
© The Warsaw Voice 2010-2018
E-mail Marketing Powered by SARE