Big business in small towns

 Two large shopping centres opened in 2006 – Manufaktura in Łódź with a rentable space of 109,000 sqm and developed by Apsys, and Galeria Krakowska (60,000 sqm, ECE Projektmanagement). Both projects are situated in city centres and not on the outskirts, as is the case with most large shopping centres presently under construction.

The largest shopping centres opened in 2006 include Gliwice Arena (a joint investment of Cefic Polska and Carrefour) with an area of 36,000 sqm built at a cost of PLN 220 mln. Another significant centre to appear on the market is Pasaż Świętokrzyski developed by Echo Investment at a cost of PLN 31 mln. It has a rentable space of 13,000 sqm, in which such retailers as E. Leclerc, RTV Euro AGD, CCC, House, Vision Express and Monnari have opened outlets.

Centre outside the centre

In the opinion of Maciej Celmer, head of the retail department of Lambert Smith Hampton: “The retail market was clearly in a state of animation in 2006, with particular attention being focused on medium and small towns by both developers and retail chains. Many properties are being built in such towns as Bydgoszcz, Białystok, Bielsko-Biała, Jelenia Góra and Zielona Góra, also Rybnik, Rzeszów and Słupsk.

Though small housing estate centres are sometimes built near large shopping centres, they do not offer significant competition. Exclusive brands usually avoid smaller centres, the rule being that multi-brand boutiques and grocery stores rent space there as well as such services as hairdressers and dry cleaners. Customers still prefer to travel to places where they have a greater choice of top-brand articles for major shopping excursions.

More and reappearing

Yet another trend recently emerged on the market – old retail properties being adapted to modern standards. These stores have been losing the battle for customers since they could no longer live up to customers’ expectations and meet safety standards. Galeria Graffica in Rzeszów and Wrocław’s Renoma are two such upgrading projects. Warsaw’s Smyk department store will also be modernized and enlarged this year. Rents increased in 2006 in upmarket shopping centres. Anna Bartosiewicz-Wnuk points out that: “Prices for retail outlets of 100 sqm space in the largest shopping centres are approaching as much as EUR 90 per 1 sqm. Such are the rates in Złote Tarasy, for instance, where tenants had already reserved space in 2006, well before the opening.” Rents are also rather high in other cities. Rents reach more than EUR 40 per sqm in Poznań’s Stary Browar which will soon be increased by 27,000 sqm, while the rates are between EUR 28 and EUR 36 in smaller towns.

There are more than 180 hypermarkets in Poland with a total retail space of 3 mln sqm. 10 hypermarkets and around 50 supermarkets opened last year, the leaders in the large-space market being the foreign chains – Tesco, Carrefour, Real and Auchan.

Polish companies were supermarket leaders, the most rapidly developing being Alma, Bomi and Piotr i Paweł, offering mostly so-called delicatessen quality goods addressed to more wealthy customers. They compete with hypermarkets in terms of quality rather than price. Maciej Celmer thinks this could change, since hypermarkets will probably not be fighting it out with each other by pricing alone, but will also do so in terms of quality.

 Polish high streets have been experiencing something of a crisis for quite some time, with most tenants moving to shopping centres.

“Złote Tarasy and Galeria Krakowska presently function as shopping high streets since they are situated in city centres and on major streets” says Anna Bartoszewicz-Wnuk.

Choose your game

Anna Bartoszewicz-Wnuk of Jones Lang LaSalle adds that: “There is no entertainment space at all in Galeria Krakowska, since developers simply do not find it worthwhile. Adapting centres to the needs of such tenants is very costly, while later on profits hit a ceiling of just EUR 6–8 per sqm.”

What will 2008 bring?

  developed by Echo Investment with 50,000 sqm of rentable space and the largest project – Galeria Legnicka, which will boast 54,000 sqm of retail space. Not a single shopping centre opened last year in Poznań – one of Poland’s major cities, but this will be offset by projects planned for 2007 and 2008. Neinver of Spain is developing two projects in the city: Galeria Malta (60,000 sqm rentable surface to be opened in 2008) and Factory Luboń. Echo Investment is also investing in Poznań with Galeria Metropolis, while Apsys is developing the Łacina shopping centre. ‘Retail warehouses’ from the Praktiker and Saturn chains will also be delivered this year.