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Warsaw

Warsaw anticipates new retail developments

Low shopping centre density ratio and the highest purchasing power are driving new retail investments in Warsaw agglomeration. By the end of 2016 approximately 200,000 sq m is expected to come onto the market. The trend of modernisations, extensions and t


International advisory company JLL has released its Warsaw City Report Q1 2014. The research spans the office, retail, industrial and residential markets and is supplemented with analyses of the investment market and economy. Below are the report's major research findings concerning the retail market in the Warsaw agglomeration .

Supply – new retail developments anticipated in Warsaw
The Warsaw agglomeration remains Poland's largest retail market, accommodating over 1.1 million sq m of shopping centre stock, and accounting for 13% of the shopping centre space available in the country. However, Warsaw region with the shopping centre density ratio of 438 sq m per 1,000 residents, remains less saturated than most of the other major agglomerations, and is behind Poznań (621 sq m), Wrocław (584), Tri-City (507), Łódź (490) and Kraków (486). In fact, the city is only ahead of Szczecin (421) and Katowice (420). With regard to the retail supply pipeline, the situation is unlikely to change in the short term.

Warsaw is also a good example of a city whose retail offer doesn't reflect the purchasing power of its residents. Warsaw agglomeration residents have the highest purchasing power (€9,706 per capita per annum) in Poland, exceeding the national average by 65%. As a comparison, Poland's average is €5,870 per capita per annum, according to GFK Polonia).

Anna Wysocka, Head of Retail Agency, JLL, said: “Currently, development activity in the Warsaw agglomeration is very low. Only one project is under construction, Galeria Legionowo, which is scheduled to open in Spring 2015. This situation, however, is likely to change in the mid to long term with approximately 200,000 sq m expected to come onto the market by the end of 2016. Interestingly, nearly 20% of this will come via extensions, i.e. Centrum Janki and Wola Park”.

New completions will include two regional GTC projects (Galeria Wilanów – 77,000 sq m and Galeria Północna – 60,000 sq m), Ferio Wawer (12,500 sq m), and a number of centrally located, smaller mixed-use projects, including Ethos (approximately 3,000 sq m of retail area), CEDET (9,000 sq m), Hala Koszyki (7,500 sq m) and Nowy Sezam (4,800 sq m).

Strong trends of extensions, modernisations and the evolution of high streets
Modernisations and extensions of existing retail assets remain the key and most prospective trends in Poland. This is particularly prominent in Warsaw where 28 out of the 36 trading shopping centres are more than 10 years old. So far, over 60% of the capital’s shopping centre stock has been modernised. After the recent remodelling of the Klif centre, food court area's facelift and extension in Galeria Mokotów and remodeling in Blue City, similar improvements are taking place in other Warsaw centres: Arkadia and Galeria Wileńska.
“Warsaw’s high street market is gradually evolving. This development is being driven by infrastructural improvements in the core city centre, which includes a new metro line development that will become operational by the end of this year, new retail projects in the pipeline, like Ethos on Plac Trzech Krzyży, CEDET and Nowy Sezam, as well as an improving restaurant offer in central Warsaw. Given all the factors above, we expect  activity in the high street area to increase markedly over the mid to long term”, Anna Wysocka added.

Strong demand and low vacancy rate
Despite considerable volume, the available stock is still well absorbed by the market. This is reflected in one of the lowest vacancy rates nationwide. High demand for modern retail space in prime centres in Warsaw has pushed the vacancy rate down to 1.5% in January 2014 (vs. 2% in H1 2013). A couple of new international and domestic brands have opened on the Warsaw market recently: German NEO and the first regular Desigual store in Arkadia, Versace Collection, Lidia Kalita and Bohoboco in Klif, Bizuu in Galeria Mokotów and Tomaotomo in Plac Unii City Shopping.

Prime rents – stable, with an increase forecast in leading shopping centres
Currently, for a fashion sector tenant, prime rents for a 100 sq m unit, located in a leading shopping centre in Warsaw, stand at approximately €85 to €100 sq m / month. Due to the ongoing re-commercialisation of key retail assets, we expect prime rents to increase by approximately 5% over the remainder of 2014.
Prime high streets remain stable and  fluctuate between €80 and €95 sq m / month, subject to location.