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The Warsaw Voice » Special Sections » September 29, 2014
The Real Estate Voice
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Shopping Malls Sprouting Up
September 29, 2014   
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The market for retail real estate in Poland is experiencing a vigorous revival.

According to real estate services company JLL, the market for modern shopping centers in Poland expanded to 8.7 million square meters of gross leasable area (GLA) in the second quarter of this year. Shopping center density in Poland currently stands at 226 sq m per 1,000 inhabitants—above the European average of 191 sq m, but below the Western European average of 255 sq m.

In the second quarter of this year, three new shopping centers opened and one was expanded. The three shopping centers that opened in Q2 2014 are: Galeria Bursztynowa in Ostrołęka, marcredo Center in Kutno, and Pogodne Centrum in Ole¶nica. Moreover, Gemini Park in Bielsko-Biała was expanded by 13,000 sq m. New Q2 projects in the retail warehousing sector included: two Karuzela Parks in Lubliniec and Turek, one stand-alone Bricoman DIY unit in Jaworzno, and a E. Leclerc hypermarket in Szczecin. Each of the cities (with the exception of Szczecin) in which new shopping centers opened in the second quarter has fewer than 100,000 inhabitants. According to JLL experts, this reflects the attractiveness of small towns to developers and tenants.

In all, the market for shopping centers in Poland will grow to include around 455,000 sq m of new space in 2014, according to JLL, a figure similar to that recorded in 2013 (466,000 sq m) and that projected for 2015 (498,000 sq m). In total, 31 shopping centers are under construction. Major new projects under construction include: Centrum Posnania in Poznań (100,000 sq m, formerly known as Łacina), Zielone Arkady in Bydgoszcz (50,000 sq m), and Sukcesja in ŁódĽ (45,000 sq m).

New chains expand

The Polish economy is growing faster than most others in Europe and Poland is an attractive market for international retailers. Beata Kokeli, senior director for retail at real estate services company CBRE in Poland, said, “Twenty-three new international retailers entered the Polish market in 2013. Fashion sector tenants accounted for the largest number of new entries—13 brands, including Karl Lagerfeld, H.E. by Mango, Hollister, Manila Grace and Armani Jeans. Also four new retailers offering home accessories became active in Poland last year: H&M Home, Ixina, Present Time and Laura Ashley.”

In terms of country of origin, six French tenants, three Italian and two each from Denmark, Sweden, Britain and the United States entered Poland in 2013. Fourteen percent of international retailers are targeting Poland in 2014, which ranks Poland 13th on a list of 60 countries surveyed by CBRE.

All the indications are that the retail market in both Poland and the region as a whole will continue to grow. Central and Eastern Europe continued to dominate shopping center development activity last year and accounted for nearly 70 percent (2.4 million sq m) of all space added to the market in Europe in the second half of 2013, according to the latest European Shopping Centre Development report by global property consultancy Cushman & Wakefield.

James Chapman, head of Cushman & Wakefield’s Central European capital markets team, said, “The appetite for shopping center investment is returning to pre-crisis levels and recent development activity has created new opportunities. Many of the larger cities across Central Europe are now reaching saturation point, with the exception of Warsaw where potential exists for new large-scale retail.”

According to experts, improved sentiment in Western Europe is having an impact on markets in Central Europe. Although compared with the pre-crisis period there are no clear signs of improvement on the market for the rental of retail space for the time being, the increasingly stronger signs of recovery in the economy make it possible to be optimistic about development activity in the long term.

Martin Mahmuti, senior investment analyst at Cushman & Wakefield, predicts that development activity in Central and Eastern Europe (CEE) will continue to grow fast. “CEE is expected to remain a development hot spot, with two-thirds of all projected European space to be completed in 2014 and 2015—6.8 million sq m and 4.2 million sq m respectively—to be delivered in region. However, the development pipeline for 2015 may be affected by geopolitical concerns in Eastern Europe which could lead to some projects being postponed into next year,” Mahmuti said.

In 2014, there are 203 new shopping centers due for completion across Europe, and 127 of these will be delivered in Central and Eastern Europe. Of the 86 extensions to be opened, 65 will be located in Western Europe. There will be 103 new shopping centers and 32 extensions opening in 2015.
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