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News Release

Warsaw

Warsaw retail market set to witness spectacular changes in city centre after calm H1


International advisory company JLL has released its Warsaw City Report Q2 2014. The research spans the office, retail, industrial, hotel and residential markets and is supplemented with analyses of the investment market and economy. Below are the report's major findings concerning the retail market in the Warsaw agglomeration,

The Warsaw agglomeration is the largest retail market in Poland with over 1.1 million sq m of shopping centre stock, equivalent to 13% of the supply countrywide. Despite this, the market still experiences one of the lowest shopping centre density ratios (438 sq m per 1,000 residents) among the eight major Polish agglomerations. This means that the Warsaw agglomeration, considering its scale and consumers' disposable income, offers an insufficient number of retail projects. It has Poland's highest spending power (€9,706 per capita per annum i.e. 165% of the national average in the Warsaw agglomeration, and €10,478 in Warsaw alone ). A combination of such factors, coupled with a constant inflow of new citizens and dynamic development of the residential market, is generating demand for new retail projects of various scales and formats, especially in Białołęka, Wilanów, but also in Wawer, Ursynów and Wola.

The current development activity in the Warsaw agglomeration can best be described as moderate. Only one shopping centre - Galeria Legionowo (10,500 sq m of GLA) in Legionowo, is under construction in the wider metropolitan area of Warsaw, and a further two are being extended i.e. Wola Park (by 17,600 sq m of GLA) and Factory Ursus (by 6,000 sq m of GLA).

Anna Wysocka, Head of Retail Agency, JLL Poland, commented: “The first half of the year was a rather calm period on the retail market in the Warsaw agglomeration. This will, however, change with a wide selection of new retail projects planned, including, i.a., Galeria Północna, Galeria Wilanów, Ferio Wawer or Fabryka Wołomin. It is worth noting that spectacular changes will soon take place in the wider city centre. The extension and redevelopment of CEDET on the corner of Krucza Street, Bracka Street and Jerozolimskie Avenue begins. What is more, building permits have been obtained for Centrum Marszałkowska on Marszałkowska Street, Hala Koszyki on Koszykowa Street and ArtNorblin on Żelazna Street. Ethos on Three Crosses Square will also be revamped. The completion of these projects will enhance the retail centre of Warsaw.

Nearly 78% of Warsaw's shopping centres are more than 10 years. As a consequence modernisations and extensions of existing retail assets remain one of the key trends.

Demand and vacancy rate
The vacancy rate in Warsaw’s agglomeration shopping centres is very low (1.5%). Warsaw’s shopping centres continue to perform well, especially leading regional schemes, such as Złote Tarasy, Arkadia or Galeria Mokotów, which are characterized by a lack of vacancies, and a waiting list of retailers. These shopping centres often serve as expansion bridgeheads for brands entering Poland. In H1 some chains were taking bigger units than before or developing new retail concepts (e.g. Zara's remodelling in Wola Park, and H&M's pop-up store in Factory Annopol). Others were expanding their portfolios by introducing new brands - fashion chain Kiabi from the Auchan Group is set to open its first stores in Warsaw shortly. In addition, neighbouring iSpot and Hour Passion stores in Wars Sawa Junior on Marszałkowska Street have just been opened.

Prime Rents
Due to recent re-lettings in prime retail assets in the capital city, prime rents for a 100 sq m unit for a fashion and accessories sector tenant increased by 5% to €105 per sq m a month. JLL anticipates prime rents to remain stable in the short to mid-tem.