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.
SEARCH
IN Warsaw
Exchange Rates
Warsaw Stock Exchange - Indices
The Warsaw Voice » Real Estate » October 26, 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.
More Modern Malls
October 26, 2012   
Article's tools:
Print

The Polish market for retail space is booming, with new premises being built and existing ones being expanded and modernized.

Poland is the third most active market in Europe in terms of retail space development, according to the Shopping Center Stock in Europe report by real estate services company CBRE. In the first half of this year, 51 new shopping centers, with a combined space of 1.5 million sq m, opened across Europe, while the construction of a further 3 million sq m is scheduled to be completed in the second half of the year. The most rapidly expanding market is Turkey, where almost 400,000 sq m of new retail locations were delivered to the market in the first half of the year. This represented a third of the total amount of retail space put onto the market across Europe in this period. Germany ranked second, with 165,000 sq m of new space, followed by Poland and Italy, each with 140 sq m.

Eighteen new shopping centers are now under construction in Poland, an overwhelming majority of which are located in medium-sized and small cities. In Warsaw, where demand from tenants is the highest, there are only two new facilities under construction. “Not surprisingly, emerging markets have dominated new retail development in recent years, with Turkey, Poland and Russia among the most active players. Looking at Poland, while we observe a lot of activity in shopping center development across the country, this is mainly in the regional cities, where quality space is already available, and in the smaller towns aspiring for their first modern retail schemes,” said Mike Atwell, head of capital markets for Central and Eastern Europe (CEE) at CBRE.

Data by real estate services company Cushman & Wakefield confirm that interest in investing in retail schemes is high in Poland. Projects started before 2012 brought 300,000 sq m of gross leasable area onto the market in the first half of the year. As a result, the total volume of modern shopping space in Poland rose to 10.9 million sq m. Shopping centers account for 73 percent of the total stock, warehouses and retail parks for 20 percent, factory outlet centers for 1 percent, and the remaining modern shopping facilities for 6 percent. At present, 800,000 sq m of modern retail space is under construction, while a further 600,000 sq m is at an advanced planning stage and scheduled for completion by the end of 2014. On the basis of the schemes that are being prepared, it is possible to estimate that the average annual supply of modern retail space will stabilize in Poland in the coming three years at 500,000-600,000 sq m.

Among the largest shopping centers completed in the first half of the year are Korona in Kielce, Nova Park in Gorzów Wielkopolski, Alfa in Grudzi±dz, and Sky Tower in Wrocław. The opening of the Europa Centralna facility in Gliwice, which combines the functions of a shopping center and retail park, is scheduled for this autumn. It will be 67,000 sq m in area. Two facilities being developed by Echo Investment, Outlet Park Szczecin and Galeria Olimpia in Bełchatów, are also expected to open in the autumn.

Poland’s highest lease rates for retail space are in Warsaw, at 75-90 euros per square meter a month in prime locations and 30-45 euros on average. As there is a shortage of vacant retail space in the city, rents are rising. On the other hand, in regional cities such as Katowice, ŁódĽ, Poznań and Gdańsk, vacant retail space is immediately available and lease rates for prime locations range from 30 euros to 50 euros per square meter a month.

New openings
Research by real estate services company Jones Lang LaSalle indicates that the last quarter of 2012 will be the most active period in terms of shopping center openings. It is expected that 162,000 sq m of new space in seven new locations and three expanded facilities will be delivered in the fourth quarter. In the full year 2012, the total amount of leasable area is expected to grow by 415,000 sq m. The increase is comparable to that recorded in 2011 and 2010, which is indicative of stable market growth.

The analysts at Jones Lang LaSalle say interest in smaller cities is growing, but developers still plan many new schemes for larger markets. In a few years’ time, several new modern facilities will be built in the largest urban centers. Some of these are already under construction, including Plac Unii in Warsaw, Auchan in Łomianki outside Warsaw, Poznań City Center in Poznań, Auchan Bronowice in Cracow, Europa Centralna in Gliwice, Galeria Katowicka in Katowice, and Wzgórze in Gdynia. Other facilities are at a planning stage. In Warsaw, the GTC company is preparing to build two shopping and entertainment centers in the districts of Białołęka and Wilanów. Building permits have recently been issued for the Łacina center developed by Apsys in Poznań and the Serenada scheme developed by Mayland in Cracow. Three facilities may be developed in the Silesian conurbation: Supersam in Katowice, Gemini Park in Tychy, and Galeria Galena in Jaworzno. Several shopping centers in Wrocław will be expanded: Bielany Park Handlowy, Magnolia Park, and Pasaż Grunwaldzki. The opening of Forum Radunia developed by the Multi Development company will change the retail landscape in the center of Gdańsk. The Galaxy center in Szczecin is due to be expanded, and two new schemes are planned in ŁódĽ: ŁódĽ Plaza and Sukcesja.

Competition drives modernization
Apart from the development of new facilities, there is also a strong trend toward modernizing and expanding existing shopping centers. Seventy-four centers with a combined space of around 2.5 million sq m, or 32 percent of the existing stock, have already undergone modernization or expansion, and Jones Lang LaSalle estimates that at least 20 premises will be modernized, renovated or expanded by the end of 2014. These include Klif, Blue City and Promenada in Warsaw.

Galeria Mokotów, another popular shopping center in Warsaw, is being expanded and modernized in a project that began this summer. The project, which involves the construction of new retail space and a thorough modernization of the food court on the second floor, will cost zl.55 million and is scheduled to be completed in April 2013. After the project is completed, Galeria Mokotów will offer around 3,500 sq m of new retail space that will be occupied by stores operated by existing tenants, including Zara and Peek&Cloppenburg, as well as nine new tenants. The food court will be modernized and expanded from 4,800 sq m to 6,200 sq m and the number of restaurants will increase from 11 to 19.

Echo Investment, one of the largest developers in Poland, after expanding Galeria Echo in Kielce and Galeria Olimpia in Bełchatów, plans further expansions, in Jelenia Góra and Szczecin.

In many cases, the modernization of existing malls is the necessary condition for these facilities to stay afloat on the increasingly competitive market. Anna Klinowska, head of the Polish Association of Retail Tenants (PSNPH), says shopping centers are market products and are governed by the same rules as all other market products. The right choice of tenants and lease rates, combined with a long-term development strategy, is a recipe for success. “All too often developers and investors forget that shopping centers are built for customers rather than tenants. And tenants forget that a rise in retail space is not tantamount to a rise in the number of customers, but to an increase in maintenance costs,” Klinowska says.

Research conducted by the PSNPH shows that the most important things for tenants in small shopping centers is how the center is managed, especially how high the rent is relative to prices on the local market, whether the costs of services are reasonable when compared with service quality, and whether the costs are calculated honestly and by the set deadlines. Other key issues are relations with tenants and crisis management.

Tenants in larger shopping centers pay attention to other issues, according to the Polish Association of Retail Tenants. What is particularly important for them is an attractive tenant mix, a high retail space occupancy rate, and an attractive range of goods and services available in the shopping center, well adapted to the needs of the local market. Other key factors include marketing—care for the tenants’ image, marketing activities on the local market, and openness to tenant marketing policies.

The PSNPH has for the third time produced a league table of the best shopping centers based on surveys conducted among tenants. The shopping and shopping-and-entertainment centers making up the league table are larger than 10,000 sq m in terms of retail space. This year’s league table was topped by Galeria Krakowska in Cracow, followed by Silesia City Center in Katowice, Manufaktura in ŁódĽ, Arkadia in Warsaw, and Galeria Bałtycka in Gdańsk.

Global brands entering Poland
The Jones Lang LaSalle report indicates that Poland is still an attractive market for international shopping chains. Several new chains have recently entered Poland, including Victoria’s Secret Beauty & Accessories and American Eagle Outfitters—both opened their stores in Warsaw. A Hollister store operated by the Abercrombie & Fitch chain is due to open at Galeria Mokotów. This will be the chain’s first outlet in Poland. German pet food retailer Fressnapf/Maxi Zoo will also appear in Warsaw.

British chains Debenhams, All Saints, French Connection and Superdry, and American chains Disney Store and Banana Republic want to establish a presence on the Polish market as well.

The entry of the Bath&Body Works chain is a good example illustrating the growing potential of the health and beauty sector, which has recorded the highest increase in sales per square meter. The number of DIY stores is also on the rise, with Castorama having opened the largest number of such facilities recently. More international shoe retailers are eyeing Poland as well. Footwear store operators Centro and Kari have recently entered Poland and the CCC chain is expanding its stores. Fashion retailer LPP Group plans to add a new brand, Sinsay, to its portfolio at the beginning of 2013. The H&M chain, which recently introduced a new brand, COS, plans to launch a new brand, & Other Stories.


Commentary:
Marcin Materny, Shopping Center Department Director at Echo Investment:

An expansion of an existing shopping center makes it possible to quickly and relatively inexpensively achieve a high market position and take advantage of the accumulated potential of the brand.

The main success factor is location—convenient to customers, well promoted, and fitting into their shopping habits. Customers know how to reach a center and how to move around it.

The position achieved by a center is also important for new tenants, who can take advantage of the customer turnout guaranteed by the existing facility. Expanding the range of services available naturally helps increase the number of visitors.

Another important criterion for new tenants are management standards. In the case of existing centers, these issues have long been known, adjusted and repeatedly tested in different variants. Newly constructed facilities will take several years to achieve such a level of quality of services provided.

Yet another advantage is much lower marketing costs. You take advantage of the potential of the brand, which is well recognized and generally has a very high market position after years on the local market. It also worth stressing the role of shopping centers as integrated public space—as the venue of social campaigns and cultural or sporting events. This is important in terms of image—the image of a shopping center as a place where there are always plenty of things happening, is steadily being strengthened in the minds of consumers, but this requires continual involvement and intensive spending.

In addition, an expansion also means much lower project costs due to a simplified administrative process, already available technical and technological solutions and full integration with city infrastructure.
© The Warsaw Voice 2010-2018
E-mail Marketing Powered by SARE