Customers on the go

The station trail was blazed by the Warszawa Wileńska shopping centre, which was built next to a PKP (Polish State Railways) station in 2002. This was followed by other retail projects: Galeria Krakowska (2006) in Kraków and Warsaw's Złote Tarasy (2007). The tradition is being continued by Neinver with Galeria Katowicka at Katowice's central station and TriGranit Development with Poznań City Center. Developers have been quick to realise the benefits resulting from such convenient locations and the footfall generated by passengers. However, only the biggest investors are able to afford the complicated and costly investment needed in transport and retail infrastructure. This does not mean that smaller players have not spotted the potential of stations. These developers are mainly involved in developing chains of retail facilities combined with transport functions. Dekada Realty has one such facility which has been operating at the PKS bus station in Myślenice for a year. Two more projects based on the same idea are to be located at the main stations in Nowy Targ (2013) and Brodnica (2014). Meanwhile, Warsaw-based company Retail Concept is working on facilities under the Karuzela brand. Two will be located in Wodzisław Śląski and Turek - at PKS bus stations, of course. Meanwhile, Retail Provider is looking at locations such as Olsztyn and Siedlce. Plans for the development of a retail facility at the station in Cieszyn have recently been announced by Biuro Prawno-Finansowe Inwestor. Plots at bus and train stations in Zielona Góra, Nowy Sącz and Lublin are also available for purchase (although the plans have been put on hold in Lublin). Additionally, TK Development is currently in the process of obtaining a building permit for its Nowy Rynek shopping centre in Jelenia Góra and around the beginning of 2015 the centre is to open its doors to both customers and passengers.

Magic location
Plots near or even at PKS bus stations tend to be in very good locations, most often in the heart of a town - and this is a strong magnet for investors. Even though the ownership structure of such properties can be complicated, they still represent tasty morsels for developers. In 1990, the PKS bus company was divided into 176 operators, some of which were closed down or privatised. "Local councils became the owners of individual plots. They either left the land to be managed by town or borough companies or announced tenders and chose their new owners through privatisation," says Aleksander Walczak, the president of the management board of Dekada Realty. These days, when people prefer to travel by car than by bus, most bus companies have become unprofitable and the bus station base and infrastructure too large. The owners of such sites want to sell them, and developers can benefit from this because stations remain good footfall generators. "Plots where PKS stations operate are usually located in town centres, which automatically increases their value, even by several times. It is worth noting that it is necessary to maintain the bus station in such cases, which can be a significant burden for a developer," explains Aleksander Walczak.

This is confirmed by Marceli Maćkiewicz, a leasing specialist at Retail Concept. "There are a lot of tenders, and some companies even come forward themselves and ask us to prepare an analysis of the potential of a given location. This is happening in even the bigger towns," emphasises Marceli Maćkiewicz. He goes on to add that the purchase price for such properties is higher than the normal market rate and can even be more than PLN 400 per sqm - but the location is their main asset. Besides, local authorities are responsible for maintaining and renovating the stations, which are often in a ruinous condition. In such cases the town authorities can become the developer's ally. Jelenia Góra city council, for one, is happy that a mall is being built at the site of the bus station. This lies on the natural route between the old town and the town centre. The authorities have recognised the town centre-forming role of the project. It will benefit local traders and restaurant owners, encouraging such businesses to remain within the town limits and giving its residents and tourists another reason not to leave it," says Jarosław Lipiński, the head of the development department at TK Development.

Pros and cons
The location is interesting but also demanding, because the developer has to incur additional costs due to the construction of the station area, as well as taking on the management issues regarding the mall and the transport section. "It is very important to get the station operating, but in a way that works for the particular location. I mean, calculating the area of the station against the number of passengers - so that the project is not too costly. Also, the deal between the developer and the station administrator is important. We employ a solution whereby the developer is the owner of the whole project and builds shopping centres that are integrated with the station buildings, with the waiting rooms, ticket offices, bus shelters etc. PKS is a tenant for us and at the same time the manager and the administrator of the transport section. We prepare the infrastructure to a turn-key finish standard and hand it over for management to the company," adds Aleksander Walczak.
Retail Concept has a slightly different approach. "We will have two facilities located at stations in Wodzisław and Turek. We have recently demolished the station building in Wodzisław Śląski, where Karuzela Wodzisław Śląski is to be built. In the future we plan to earmark an area of app. 100 sqm for the waiting room with ticket offices and a newsagent's. Four bus stops are to be built next to the building. The station will be integrated with the retail section - they will be under the same roof. Its operator will be the local PKS company in Rybnik. We will lease the premises to the town, which runs the company. The station will operate on a lease basis, but the rent will be at an appropriately low level. We are not counting on profits from the rent but on other benefits - such as greater footfall," says Marceli Maćkiewicz. TK Development operates on a somewhat larger scale. In Jelenia Góra the developer is to build the Nowy Rynek mall with a total area of 56,000 sqm, including a leasable area of 24,000 sqm. The PKS bus station is to operate on a ?stop & go' basis and its waiting room will be replaced with the shopping centre building. "We wanted to use this central location, the best possible one in the town, as well as the additional footfall that will be generated by the transportation links," stresses Jarosław Lipiński. "We are in a relatively good situation because it is the main and the only PKS bus station in Jelenia Góra servicing through-routes as well as the local transport," he adds. Even though Dekada in Myślenice does not monitor the number of customers visiting the centre, it is already clear, one year from its opening, that customers have embraced it. "We are very happy with the project. The car park, which we thought had been properly planned for the size of the project, is actually too small. We estimate that there is a daily customer flow of app. 3-4,000 people a day in Dekada Myślenice. This figure is based on the good financial results of its tenants and allows us to think about building an extension to the mall. We are now talking to the owners of the neighbouring properties - our future plans depend on the purchase of these areas. The centre currently has a leasable area of 3,500 sqm, but if everything goes well, it could be twice as large," claims Aleksander Walczak. Meanwhile, Marceli Maćkiewicz reveals that the transport function has increased the estimates for the catchment of the centres in both Wodzisław Śląski and Turek. "Wodzisław is a destination for the residents of the nearby towns and villages, and thanks to the transportation element, the flow of customers to the centre will be larger. We expect that the catchment in this case comes to app. 150,000 people within a 20-minute drive," adds Marceli Maćkiewicz. A larger number can be calculated for a bigger town, such as the data cited by the developer of the Nowy Rynek shopping centre in Jelenia Góra. "The station is incorporated into the mall and all the customers who come here will have to pass its shopping gallery. This natural traffic amounts to 3 mln passengers per year in this location. If we add the customers of the shopping centre itself, it could well exceed the typical parameters for towns of this size. Jelenia Góra has app. 85,000 inhabitants and we expect that its footfall will be similar to that of a town with 200,000 inhabitants," explains Jarosław Lipiński of TK Development.

All that glitters is not gold...
However, as usual there are two sides to this story. A very good location which provides customer flow... but are these actually the sort of customers a developer would want? "The profile of a passenger who uses the services of PKS does not match the profile of a typical mall customer. Such a person does their shopping impulsively, often in haste or under stress. They usually choose newspapers or some minor grocery products. The presence of a bus station certainly does not lead to greater purchases of clothes, which is why you need to be very cautious when arranging the tenant mix in such facilities," points out Renata Kusznierska, the director of the retail and property management department at Savills. When it comes to shopping centres combined with stations, the issue requires particular care and may well determine the success of a project. "The people traffic at stations is different from the typical traffic in shopping centres. In the case of a station, the visitors are usually people who are on their way or coming back from work; they are looking for basic products, so doing a lot of shopping in a supermarket is not convenient for them. Unless it is a shop with a separate fast shopping area where one can buy newspapers, crisps, cola, sandwiches, etc. without having to queue. This is why service areas with cafés, restaurants, fast food, kiosks, hairdressing and beauty salons have proven to be more effective in such locations. The mix should be medium and low-end, unless the location is so strong and has such good transport links that it additionally enhances the operations of the station. I repeat - additionally. However, it is often the case that the traffic generated by passengers does not translate into fuller shopping baskets," adds Renata Kusznierska. TK Development has found another solution, locating a service area on the ground floor. "The Nowy Rynek shopping centre will be positioned as a fashion facility. Thanks to the placement of car parks on the roof of the mall, the +1 level has been given a typically fashion-oriented character. Meanwhile its ground floor will include a service area, a supermarket and shops offering shoes and accessories. We want to open a food court right next to the station for customers who will be waiting for buses, so that they are able to have coffee or something to eat," says Jarosław Lipiński. Renata Kusznierska also points out the purely logistical solutions. "You should not obstruct customers' or passengers' access to the station. This might simply make them angry. It is important that the connection between the two facilities is smooth and uncomplicated. A large shopping centre within the main passageway can only scare a customer away, especially if they are late and have to walk a long way to get to the station," she warns us. The developer of Nowy Rynek sees things differently. "The shopping centre is placed in an ideal spot, and not only because of the station. The plot is located at the end of a shopping street which leads to the old town several dozen metres away. It is natural that customers will want to walk through the roofed shopping arcade of the mall to get to the bus stands. Thanks to this the conditions and comfort of travelling will be considerably improved, and passengers getting on and off the buses will have direct access to the stores," explains Jarosław Lipiński.

The best solution, therefore, is to treat the station as an additional function. The main factor in assessing a project is its location, while the purchasing power of customers in a given town also requires consideration. There are many stations in Poland, and not all of them are suitable for a shopping centre. "Even in Warsaw not all of these sites are attractive," claims Renata Kusznierska.

Aneta Cichla