The calm after the storm

With the credit crunch behind us, the investment landscape looks bleak with banks wary to lend and growth levels below what many have come to expect. Still, opportunities abound as the recovery across the region takes root

On May 18th retailers, developers and investors met in the Marriott Hotel in Warsaw for the 12th Retail Vision conference for Central and Eastern Europe organised by Eurobuild Conferences. Pasquale Diana, executive director and senior economist for Morgan Stanley, set the tone in his keynote speech, examining how Poland had survived the credit crunch almost unscathed. The country - he noted - was fortunate to have started with a strong fiscal position, allowing the government to loosen its monetary policy just as others were tightening their belts. Then followed the first discussion, 'Playing catch-up', moderated by Bartosz Miszkurka, the head of real estate and partner at Deloitte Legal Pasternak i Wspólnicy Kancelaria Prawnicza. He was joined by  Grzegorz Trawiński, the head of the representative office of Eurohypo bank in Poland and by Andrzej Bąk, the chief legal counsel of NFI Empik Media and Fashion. All the panellists remarked on the change in the market with Andrzej Bąk capturing the mood when he observed that in the past every shopping centre worked. Life is now harder as success requires work. 'Small is beautiful' was the next topic. Tatiana Spencer, the  director of King Sturge's retail agency, led a panel that included Piotr Korek, the vice president of Tesco Polska, Andrzej Lasocki, the retail development director of Panattoni Europe, and Mateusz Siejka, the portfolio manager for Poland of Bywater Properties. Everyone, except Tatiana Spencer, agreed that a project's viability depended on low rents. For her, it is more important that rents be mutually beneficial to all parties.
Agnieszka Sora, the managing director of Gfk Polonia, was next on the stage. Her presentation, 'Shopping bags of  potential', stressed that although Poland has more retail space per inhabitant than Germany, it remains below the European average. A discussion then followed on 'Eastern promise', which Alexander Rafajlovič, Cushman and Wakefield's head of research for the Czech Republic and Slovakia, kicked off with a presentation examining the fall in the supply of new retail space across the region. Later, he was joined by Yann Guen, vice president of Mayland Real Estate, Isabelle Clerc, the CE head of asset management for AEW Europe, and Pablo Ribeiro, a managing partner of H3 Polska. Yann Guen believes investors "see in shopping centres in Poland a more promising investment than in some other CEE countries Mayland is now focusing on both the creation of large projects and the extension of existing centres. The nearest opening will be the extension of Jantar in Słupsk."
After lunch, the conference resumed with a presentation by Anna Wysocka, the director of Jones Lang LaSalle's retail leasing department, on 'The balance of power'. She highlighted the gap between pre-credit-crunch predictions of the retail space that was to be delivered onto the Polish market (app. 1 mln sqm in 2010), and the reality, an area of app. 400,000 sqm. Later, she was joined by  Magdalena Zienkiewicz, a partner of WKB Wierciński, Kwieciński, Baehr; Renata Kusznierska, the managing director of Carrefour property Poland; Agnieszka Baczyńska, director of the leasing department of Plaza Centers Poland; and Kamila Jaroszyńska, the retail expansion manager for Sephora in Poland and the Czech Republic. Investors and tenants, Agnieszka Baczyńska stressed, are partners who share problems, so negotiating lower rents is possible. Andrzej Sitko, the director of Arup, now stepped up to talk on 'Green Areas'. Shopping centres are behind offices in the adoption of ecological certification, such as LEED or BREEAM. Such programmes, he said, when considered at the very beginning of the development process do not entail excessive extra costs.
The day ended with a discussion on 'Added value', led by Grzegorz Jamroziak, the associate director of retail property management at DTZ. The panellists included: Agnieszka Mielcarz, the shopping centre manager of Centrum Handlowe Forum Gliwice; Aleksandra Zentile-Miller, a director of Chapman Taylor in Warsaw; Piotr Pawłowski, the head of development at Unibail-Rodamco; and Rafał Grzeszek, the regional director of Metro Group Asset Management. Chapman Taylor was compared by Aleksandra Zentile-Miller to a doctor's surgery: where clients go to seek cures for their ailing shopping centres. The maladies treated are often those of layout, such as badly placed escalators.
Everyone at the conference acknowledged the challenging nature of the current times and many clearly chafed at the new-found stinginess of banks. Nevertheless, a calm optimism prevailed. It only remains to be seen if the dreams of investors and retailers will have been realised when the 13th retail conference comes around.  (AH)