In the city’s heart

The opening of eight shopping centres in the first half of 2007, brought an additional 264,800 sqm of retail space to the Polish market. Even more importantly, most of these projects are situated in city centres, including the biggest of the lot – Warsaw’s Złote Tarasy

Apart from the ING Real Estate project (63,600 sqm gross shopping space), such centres as Pasaż Grunwaldzki (50,000 sqm) and Arkady Wrocławskie (30,000 sqm) in Wrocław, Forum Gliwice (43,000 sqm), Plaza Lublin (23,800 sqm), Plaza Rybnik (18,500 sqm) and Plaza Sosnowiec (13,000 sqm) have also opened their doors to customers, as well as the second stage of the Stary Browar shopping centre in Poznań (26,000 sqm). But that’s not all. The market also witnessed the opening of several other centres, including Ferio Legnica (13,200 sqm) from Raiffeisen Evolution and Zielony Park Handlowy of around 24,000 sqm. All in all, the first quarter of 2007 saw a total of 400,000 sqm new space coming on to the market (including around 380,000 sqm in shopping centres), increasing supply to 6.7 mln sqm (around 4 mln sqm of which was in shopping centres).

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In the view of Katarzyna Michnikowska, senior analyst at Cushman & Wakefield: “The most important event of the last six months was the opening of Złote Tarasy. This was the first multifunctional complex to be developed in the very heart of Warsaw, allowing the whole business district to be served by it, together with the estimated 100,000 people who will work in it. But these crowds of white-collar workers will not be the only customers. Its location in the city’s transportation hub allows Złote Tarasy to draw in customers from outside Warsaw.

As Katarzyna Michnikowska sees it, Złote Tarasy is unique not only in the kind of tenants who do business and its architecture, but in the mind-numbing rents demanded – substantially exceeding EUR 100 per sqm in some cases. But have these rates translated into equally big business? It is still too soon to say. Conclusions will only be able to be drawn a full year after the opening.

Silesia also makes an impression

After Warsaw, Lower and Upper Silesia are also making their mark on Poland’s shopping map. Two large centrally-located malls opened in Wrocław: Echo Investment’s Pasaż Gruwaldzki and Arkady Wrocławskie, both of which began business after some delay. However, Pasaż opened without having been granted the required licence from the building supervisory service, which led to its being closed, only to reopen once the necessary documents were obtained.

Plaza Centres and the Braaten+Pedersen/Quinlan Private Golub partnership are the latest companies to finish projects in Upper Silesia, amounting to 74,500 sqm gross shopping space. The former celebrated the opening of Plaza Rybnik and Plaza Sosnowiec, whilst the latter developers were pleased to be able to complete the ambitious Forum Gliwice project.

Katarzyna Michnikowska reveals that: “All the space delivered on to the market in the first half of this year has, without exception, found tenants – just as it did in the same period of 2006. The stable demand, particularly for modern shopping space in central locations, results in most centres being fully-rented before their opening date.”

Indexes climb

Proof that the shopping space leasing market has remained highly active throughout the first six months of the year comes in the form of the 170 transactions mediated by just one company – Cushman & Wakefield. Further proof is given by the steadily falling percentage of vacant space and rising rents. Katarzyna Michnikowska is confident that 2007 and 2008 will witness a stabilization of the highest rental rates in shopping centres, which will reflect the completion of the commercialization of large, attractively situated centres in Poland’s largest cities (Galeria Bałtycka in Gdańsk, Malta in Poznań and Galeria Legnicka in Wrocław).

The principal target of investors interested in acquiring real estate remains the achievement of fully-leased properties. In the past six months they have purchased shopping centres with a combined value of more than EUR 840 mln. One such transaction was the sale by the Simon Ivanhoe Trust of five properties – Zakopianka in Kraków, Borek in Wrocław, Dąbrówka in Katowice, Turzyna in Szczecin and Arena in Gliwice – with a total area of 64,300 sqm to the Macquarie Country Wide Trust for EUR 232 mln.

The time for small cities has arrived

The most important shopping projects opened in the first half-year were in large conurbations (Warsaw and Wrocław). The situation will differ in the second half of the year when medium-sized cities will take centre stage (e.g. the opening of Carrefour shopping centres, Focus Park in Rybnik, Millenium Hall in Rzeszów, Galeria Gala in Lublin and a Factory Outlet in Luboń), though developers also expect centres to open in such cities as Gdańsk (Galeria Bałtycka) and Factory Outlet in Kraków. According to Cushman & Wakefield’s estimates, a further 350,000 sqm shopping space will open by the end of the year, around 300,000 sqm of which will be in shopping centres.

Katarzyna Michnikowska forecasts that: “Retailers are expanding and introducing new brands to the market, hence the rising demand for shopping space and the prospect of keeping demand at a high volume. The percentage of vacant space will thus continue to fall. This means the expected increase in the numbers of shopping centres in medium-sized cities between 2009 and 2011 and a reduction in the number of new malls in the larger conurbations will lead to a differentiation between the highest rent rates, depending on the city.

In addition, greater competition in the larger cities will translate into a diversification of rents between centrally-located shopping centres and older ones in less attractive locations. Difficulties which exist in assessing the impact on the retail market of the recently introduced amendments for large-scale shopping centres must be taken into account, particularly when it comes to the rate at which new facilities are developed, and also as regards demand and rents. In the short term, this time factor may cause animation in the recommercialization of existing centres and a rise in rents.” (Editor’s note: see p. 20 for more on legislation amendments).           

(mk)