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News Release

Warsaw

502,000 sq m of new shopping centre space delivered in 2015

2015 saw a six-year high in the amount of shopping centre space delivered to the Polish market, with a further 566,000 sq m under construction. Retail investor activity hit a post -2006 high with projects worth over €2.26 billion changing hands last year


International advisory firm JLL summarizes 2015 on the Polish retail market.

Anna Bartoszewicz-Wnuk, Head of Research and Consulting at JLL, said: "2015 was a very busy year on Poland's retail market with shopping centre completions totaling 502,000 sq m. It is a considerable increase on 2014 when 332,000 sq m entered the market, and the most active year since 2009. 2016 will be calmer in terms of new deliveries – if everything goes according to schedule, shopping centre stock will grow by 358,000 sq m".

The biggest shopping centres delivered to the market in 2015

ProjectCityGLA
Zielone ArkadyBydgoszcz50,000 sq m
SukcesjaŁódź46,300 sq m
Tarasy ZamkoweLublin37,900 sq m
Aleja Bielany – extensionWrocławadditional 35,000 sq m
Galeria GalenaJaworzno31,400 sq m

In 2015, the Polish retail market grew in total by 651,400 sq m of retail space including shopping centres (502,000 sq m), outlet centres (21,300 sq m), retail parks (30,800 sq m) and stand-alone warehouses (97,300 sq m).

"One of the most interesting trends on the market is the development of services and shopping offers in transportation hubs such as railway stations with passengers providing steady footfall. Furthermore, the revitalization, re-modelling and extension of existing projects also continue to be an important trend on the Polish retail market. This is in response to aging structures, growing competitiveness and the constantly changing expectations of clients", Marta Augustyn, National Director, Retail Agency, JLL, commented.

At the beginning of 2016, total modern retail stock in Poland amounted to 13.01 million sq m in the following retail formats: 9.28 million sq m (71%) in shopping centres; 3.52 million sq m (27%) in retail parks and stand-alone warehouses; and 0.21 million sq m (2%) in outlet centres.

Over the year, shopping centre density in Poland increased from 229 to 241 sq m / 1,000 residents. When all shopping centre construction now underway has been completed, a shopping centre density of 256 sq m/ 1,000 residents is expected. It will be above the European average level of 202 sq m, but still below the Western European average (currently at 262 sq m).

"In total, current construction activity that involves shopping centres stands at 566,000 sq m of GLA, which is 20% lower than in the same period last year. The highest amount of space being developed is in major agglomerations", Anna Bartoszewicz-Wnuk added.

The biggest shopping centres under construction

ProjectCityGLA
PosnaniaPoznań99,000 sq m
WroclaviaWrocław64,000 sq m
Galeria PółnocnaWarsaw64,000 sq m
Forum GdańskTri-City62,000 sq m

Demand – expansion of Polish brands

In 2015, 18 international brands entered the Polish market. Last year's most highly anticipated fashion debut on the Polish retail market was that of Superdry. Other brands that made their debut last year included Kiabi, with an extensive offer for families, sports brands Decimas and Courir as well as Origins from the cosmetics segment. In addition, 2015 saw brands such as Dunkin' Donuts, Fuddruckers, Dairy Queen, Benihana open stores in Poland. However, some retailers (Czech Bata, American GAP, and Russian Centro) decided to withdraw from the Polish market. Nevertheless, such exits should not be considered symptomatic of a wider trend.

Polish retailers are growing stronger and successfully expanding their portfolios. Good examples, from the LPP Group, are á Tab, which opened 13 shops in 2015, and Tallinder, a more upmarket fashion concept that will open its first store in 2016.

Some international brands, such as H&M, are developing dynamically as well and are seeking space for new concepts, including, for example, interior design.

"We expect to see more debuts by both Polish and foreign brands. Their presence will certainly revamp and diversify the retail offer. In 2016, in addition to LPP's Tallinder, we expect to see the entry of Forever21, a well-known American fashion brand. Nevertheless, there are still a number of brands such as Banana Republic, French Connection, Primark and Uniqlo, which haven't yet committed to establishing a foothold in the country", Marta Augustyn said.

Another trend that is noticeable is the expansion of the non-shopping offer in shopping centres.

"The range of the F&B sector, entertainment and cultural amenities is growing in importance, and shopping centres are beginning to play a vital role in local communities by taking over non-commercial functions. Good examples of this include the opening of co-working offices, libraries, municipal offices, post offices, and theatres. These types of services play a dual role, both helping to fill vacant space, and also driving additional footfall during less busy hours", Anna Bartoszewicz-Wnuk added.

Rents and vacancy rates

Prime[1] shopping centre rents increased slightly in Warsaw Agglomerations (€110-130 / sq m / month) , Poznań (up to €45-50), Kraków (up to €50-55) and Tri-City (€47-50), and remained stable on other markets.

Among major agglomerations, the lowest vacancy rate was registered in Szczecin (1.6%), while the highest was observed in Poznań (4.6%).

Investment market – the highest result since 2006

Agnieszka Kołat, National Director, Retail Investment CEE, JLL, commented: "2015 was an excellent year in the retail investment sector. Projects worth over €2.26 billion changed hands last year - the market's best result since 2006's record breaking performance".

Key selected retail investment transactions in 2015

ProjectCity

Price

(in €)

VendorBuyer
RivieraGdynia291-300 millionFonciere Euris and RallyeUnion Investment
Stary BrowarPoznańApprox. 290 millionFortis Nowy Stary BrowarDeutsche Asset & Wealth Management
Bonarka City CenterKrakówConfidentialTriGranitTPG
Karolinka and PogoriaOpole and Dąbrowa Górnicza220.8 millionBlackRockRockcastle
SferaBielsko-BiałaConfidentialBielsko Business Center 3 Sp. z o.o.CBRE Global Investors

One of the key deals in 2015 was by Griffin Real Estate, which acquired a majority stake in Echo Investment, an experienced Polish developer.

"Traditionally, retail investors were most interested in prime schemes located in major agglomerations. Good examples of this are the spectacular sale transactions of Riviera in Gdynia, Stary Browar in Poznań and Bonarka City Center in Kraków. Nevertheless, projects with strong positions located in smaller cities were also attracting buyers. Investor interest in the retail sector remains high. This translates into prime yield compression to 5.0% in the case of the best prime dominant schemes", Agnieszka Kołat, added.



 

[1] Prime rents refer to shop units of 100 sq m earmarked for fashion & accessories and located in the best-performing assets in given city

[2] Vacancy rates as of H1 2015