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The Warsaw Voice » Special Sections » March 3, 2014
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March 3, 2014   
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The supply of retail space is growing rapidly both in Poland’s largest conurbations and in smaller cities.

After a notable deceleration during 2012, last year brought significant growth in the Polish market for retail space. The shopping center segment grew by 459,000 square meters, with more than half (275,000 sq m) of that delivered in the last quarter of 2013, according to real estate services company Jones Lang LaSalle. Last year brought substantial influxes of new floor space in some of the major agglomerations—Katowice (Galeria Katowicka and Europa Centralna), Poznań (Poznań City Center), Cracow (Galeria Bronowice), the so-called Tri-City (Riviera—extension of the Wzgórze project), and Warsaw (Plac Unii City Shopping). Notable openings were also seen in mid-sized and smaller cities, including Nowy Sącz (Galeria Trzy Korony), Łomża (Galeria Veneda), Inowrocław (Galeria Solna), Chojnice (Brama Pomorza) and Czechowice-Dziedzice (Stara Kablownia).

One interesting project completed last year was the Centrum Handlowe Riviera shopping center in Gdynia, developed by the Mayland company. Created through the expansion of the Wzgórze center, Riviera offers 70,000 sq m of retail space and is divided into three sections. The building has only two floors and features a wavy facade with a length of 600 meters. The center is home to nearly 250 stores and 34 cafes, bars and restaurants. Almost 1,500 workers have found employment in the new center. Moreover, the road system around the center has been redeveloped and parking lots for more than 2,000 cars have been built.

According to Jones Lang LaSalle, at the end of 2013, the supply of modern retail stock in Poland totaled 11.8 million sq m, the vast majority (72 percent, nearly 8.5 million sq m) of which was in shopping centers. Floor space in retail parks and retail warehouses amounted to 1.3 million sq m and 1.85 million sq m respectively. A total of 10 outlet centers offered a further 163,000 sq m. The average density of shopping centers in Poland rose by 12 sq m over the course of 2013 to 220 sq m per 1,000 inhabitants.

Prime shopping center rents remained stable throughout 2013. The highest rents are typically found in Warsaw, where they now range between 85 euros and 100 euros per sq m per month, which marks a 5-percent increase on 2012, and is largely due to the number of lease renewals/extensions in Warsaw’s leading projects.

Retail Warsaw
Warsaw is by far the largest retail market in Poland. Warsaw’s stock of modern retail space of 1.4 million sq m at the end of 2013 translates into a saturation rate of just 430 sq m per 1,000 inhabitants. This offers numerous retail development opportunities. Although there is only one project under construction (7,000 sq m in Royal Wilanów), there are more projects in the pipeline. These include small convenience or mixed-use projects such as Hop Stop in Falenica (7,000 sq m), Vogla Park (11,000 sq m) and Ferio Wawer (12,000 sq m) as well as large projects such as Fabryka Wołomin (31,000 sq m), Galeria Wilanów and Galeria Białołęka (60,000 sq m each).

With new international retailers on the Polish market still preferring to locate their stores in prime shopping centers rather than on high streets, this segment of the Warsaw retail market is still waiting for infrastructure changes that could boost it considerably. The most important milestone will be the completion of the second metro line’s central junction on Świętokrzyska Street scheduled for the end of 2014. Nowy Świat Street and Trzech Krzyży Square are still seen as Warsaw’s best high-street locations.

Beata Kokeli, a senior director for real estate services firm CBRE in Poland, said, “In Warsaw, well-performing projects are being extended in order to retain clients by offering them more choice, while older schemes are being enlarged and upgraded. Examples of pipeline extensions and new phases include Centrum Janki, Wola Park, Promenada and Arkadia.

The redevelopment of a part of Arkadia, the largest shopping center in Warsaw, in a project that began in February, aims to significantly increase customer comfort by enlarging and making architectural changes to the food court and arranging a modern recreational and educational zone for children. The main part of the first level of Arkadia will grow by more than 200 sq m and be transformed into a green zone. The number of seats in the restaurant zone will increase from 500 to at least 800.

New brands on the Polish market
Poland is still attractive to retailers, both those entering the market and those already active on it and seeking opportunities for further development. In 2013, more than 30 new brands appeared, among them Louis Vuitton, Hollister, Sports Direct, Celio, Original Marines, Only, Joop!, Tape a l’oeil, Bobbi Brown, and Laura Ashley. Operators with a large portfolio of brands introduced new concepts, such as Sinsay (LPP), H.E. by Mango, and H&M Home. New store formats, such as Empik Express, emerged. Discount fashion store chains (Pepco, KiK, and NKD) grew dynamically, largely thanks to the development of small retail parks. On the other hand, some retailers (Charles Voegele, Marrionaud, Wallis, KappAhl, Jackpot & Cottonfield, LaSenza, and Flo) decided to either leave the Polish market or optimize their store portfolios.

According to experts, the market should continue to grow dynamically this year. Edyta Potera of Jones Lang LaSalle said, “2014 will be the second very intensive year in a row for Poland’s retail market. Construction activity remains high as currently 610,000 sq m is in the development stage, of which approximately 500,000 sq m is scheduled for 2014. The largest projects include Atrium Felicity and Tarasy Zamkowe in Lublin, Galeria Warmińska in Olsztyn, Galeria S in Siedlce, and Galeria Amber in Kalisz. It is also worth noting that the retail offering in eastern Poland and in towns with less than 100,000 residents will grow. In addition, extensions of existing centers, aimed at strengthening their position on the local retail markets, will remain one of the key and most prospective trends, especially when it comes to older projects.”

Sites planned for enlargement in 2014-2015 include Galeria Pomorska (Bydgoszcz), Ogrody (Elbląg), Atrium Copernicus (Toruń), Magnolia Park (Wrocław), Gemini Park (Bielsko-Biała), and Galeria Sudecka (Jelenia Góra).

As for demand, established projects, with a good trading history, will remain the most popular locations among retail tenants. “The best performing shopping sites in major agglomerations still attract the greatest interest. However, good quality projects in smaller cities are also gaining market recognition. That said, owners of assets perceived as secondary products or located in more competitive markets should be prepared to have to optimize their rental levels,” Potera said.
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