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 » March 1, 2013
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.
Retail Chains Still Interested in Poland
March 1, 2013   
Article's tools:
Print

Despite the economic slowdown, Poland’s retail market shows stable growth.

Poland is in fifth place in terms of the expansion plans of international retail chains in 2013, according to a recent report by global real estate services firm CBRE. The report, entitled How Active Are Retailers in EMEA?, examines the expansion plans of 100 leading retailers across Europe, Africa and the Middle East. The report finds that the most important target for retailers in 2013 is Germany. The strong position of Poland and its better position on the list than last year are a reflection of the good condition of the Polish economy and an optimistic outlook for the Polish retail market. Poland is the only Central and Eastern European country to have been ranked among the top five nations by CBRE. For example, the Czech Republic was ranked only 10th. In comparison with last year’s league table, Poland moved up by five notches and is now ahead of countries such as Russia and Belgium. More than 22 percent of the retailers surveyed declared they would increase the number of their stores in Poland next year.

Businesses affiliated with the Polish Association of Retail Tenants are also optimistic about their future. Retailers are planning to open new sales outlets and strongly develop their franchise networks. Sławomir Strycharz, chief financial officer at shoe company Wojas, says, “In 2013, Wojas plans to follow a two-pronged approach when it comes to developing its chain. On the one hand, we are planning to open new outlets, and, on the other, we want to remodel existing stores. We would like our chain to expand to include 10 or so new outlets by the end of the year.”

Anna Klinowska, head of the Polish Association of Retail Tenants, said, “A time of crisis is the best time for development. Well-tested retail concepts are still very popular. Due to the greater supply of retail space, tenants should be able to secure very favorable lease terms, which may prove to be very valuable once the market improves.”

According to real estate services company Jones Lang LaSalle, key trends on the Polish retail market include continued interest from international retailers and shopping center modernization.

A 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 stores in Warsaw. A Hollister store operated by the Abercrombie & Fitch chain is due to open at Warsaw’s Galeria Mokotów mall. 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.

More new retail space
The total amount of leasable area offered by shopping centers in Poland grew by an estimated 415,000 sq m in 2012. The increase is comparable to that recorded in 2011 and 2010, indicating stable market growth. At present, 690,000 sq m of modern retail space is under construction across the country, scheduled for completion by the end of 2014.

Analysts at Jones Lang LaSalle say interest in smaller cities is growing, though developers are still planning many new projects for larger markets. Over the next few years, 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 the 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 to be developed by Apsys in Poznań and the Serenada project to be 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 projects are planned in ŁódĽ: ŁódĽ Plaza and Sukcesja.

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, Promenada, and Galeria Mokotów in Warsaw.

New trends
According to experts at global property adviser CBRE, in 2013 the commercial real estate market will be shaped by an increasingly competitive environment coupled with stalling economic growth. Among the many trends on the shopping center market, CBRE experts have singled out three which they expect to be actively targeted by investors. These are the unexpected yet dynamic growth of high streets in major Polish cities, the emergence of new specialized shopping center formats and renewed interest in big cities, which are opening up new market and geographic niches.

Contrary to expectations, the situation on the shopping center market is causing high streets in Warsaw and other big cities to flourish. A shortage of new premium commercial space in the centers of many cities, which enjoy high disposable income and strong demand, has meant that areas which have so far lain dormant are now buzzing with commercial activity.

Another reason for thriving high streets are the barriers faced by independent tenants when attempting to enter shopping centers, coupled with a boom in the number of bars and restaurants, as well as rapidly growing number of independent stores.

“In Warsaw, the area south of the city center is growing especially quickly in the vicinity of Trzech Krzyży Square and Mokotowska Street and the streets to both sides of Marszałkowska Street (Nowogrodzka, Żurawia, Wspólna, Hoża and Wilcza). This area has become a veritable mecca for bars, restaurants, independent boutiques and specialist stores,” said Karina Kreja, Associate Director, Research and Consultancy, at CBRE in Poland.

Shopping center projects are also becoming increasingly specialized. Up till now mainly refurbishments and extensions of existing centers were mentioned in this context. But according to experts at CBRE, more symptomatic is the growing number of specialized projects such as retail parks (complexes of specialty stores such as furniture shops or DIY stores), discount centers (outlet centers) or entertainment centers. A maturing shopping center market is forcing developers and asset managers to broaden their range. This metamorphosis is well illustrated by the evolution of outlet centers, which have become not only discount shopping destinations but also places to dine or to spend time as a family.

CBRE experts say they are also observing resurging interest from investors regarding retail real estate in big cities. After an initial phase of expansion on the Polish market, which focused on a few key urban locations, in the 2006-2009 period developers began expanding quickly in smaller cities. Even though this growth is continuing, its potential is clearly on the decline, while medium-sized and small cities are becoming increasingly saturated with retail real estate, to a degree beyond the demand created by these markets. Large cities are still offering a lot of opportunities, if not in the segment occupied by leading top quality projects (where competition is stiff), then when it comes to small, local, neighborhood projects or strip malls. Especially the outskirts of cities and distant suburbs still have demand for modern retail real estate and offer good growth prospects.

Big potential in Warsaw
Agnieszka Tarajko-B±k, Retail Analyst at Jones Lang LaSalle’s Research and Consultancy department, said, “Warsaw still remains one of the least saturated markets but at the same time boasts the highest disposable income per capita in Poland. The situation is not expected to fundamentally change even after the projects currently in the pipeline are completed. Cities such as Wrocław, Toruń, Legnica and Zamo¶ć achieved the highest density figures for their respective city size categories. But there is a pool of markets like Lublin, Olsztyn, Elbl±g, Siedlce and Ostrołęka, to name just a few, showing further retail development potential.”

The vacancy rate in Warsaw’s shopping centers is low at 2.6 percent, but has increased considerably from the 1.6 percent recorded in the middle of 2011. Prime projects such as Złote Tarasy, Arkadia and Galeria Mokotów remain the most desired target for many retailers, with vacancy rates close to zero. Increasingly, a number of typical shopping center tenants who are not able to secure new premises in the best performing projects are considering high street locations. In consequence, a gradual improvement of Warsaw’s best shopping streets has been observed. In particular, the increased popularity of Mokotowska Street and Zbawiciela Square is noticeable as design boutiques and up-market stores choose it as the destination of choice, preferred over a shopping center location.

Warsaw is still the most expensive retail location in Poland with prime headline rents in shopping centers and high street units reaching 90-95 euros per sq m per month and heading upwards. Prime average rents are far more moderate and currently remain at the level of 30-45 euros per sq m per month, with some downward pressure already noticeable.

In other major cities rents for this type of space are between 40 and 55 euros per sq m per month. In cities with 100,000 to 300,000 inhabitants, rents are between 21 and 40 euros per sq m per month, while in slightly smaller cities (with a population of 50,000 to 100,000) they range from 20 to 27 euros per sq m per month. Owners and developers need to be prepared for strong pressure from tenants to bring down the rents. A.R.

Commentary
Magdalena Fr±tczak, Director, Retail Agency, CBRE in Poland:
The expansion plans of international retail chains in Poland are good news for the owners and developers of modern retail space in shopping malls and on high streets. Many of the facilities are currently being expanded or modernized, so they will be ready for new tenants. However, the chains are increasingly careful when choosing the locations for their stores. They prefer to wait for a perfect location for years rather than open their showrooms in a place that they consider not suitable enough for the image of their brand.
© The Warsaw Voice 2010-2018
E-mail Marketing Powered by SARE