Pulse Document

Poland Retail Market - Q4 2013
A busy end to 2013. The
market to maintain its
momentum in 2014.
Supply
At the end of 2013, the supply of modern retail stock in Poland
totalled 11.8 million m2, the vast majority (72%, nearly
8.5 million m2) of which was found in shopping centres. Floor
space in retail parks and retail warehouses amounted to
1.3 million m2 and 1.85 million m2, respectively. A total of ten
outlet centres occupied further 163,000 m2.
Shopping centres
After a notable deceleration during 2012, 2013 brought significant
growth in retail space. The shopping centre segment grew by
459,000 m2, with more than half (275,000 m2) of that supply being
delivered in the last quarter of 2013. The fourth quarter brought
substantial influxes of new floor space in some of the major
agglomerations: Poznań (Poznań City Center), Kraków (Galeria
Bronowice) and Tri-City (Riviera, an extension of the Wzgórze
scheme). Finally, the Warsaw market saw the opening of an
inner-city shopping mall: Plac Unii City Shopping.
Poznań City Center in Poznań
Construction activity remains high: currently, 610,000 m2 is at the
development stage, of which approximately 500,000 m2 is
scheduled for 2014. The largest projects encompass Atrium
Felicity and Tarasy Zamkowe in Lublin, Galeria Warmińska in
Olsztyn, Galeria S in Siedlce and Galeria Amber in Kalisz. A
considerable share (35%) of this new supply is underway in towns
with populations below 100,000 residents. Projects to be
completed in those locations include Galeria Neptun (Starogard
Gdański), Galeria S (Siedlce), Galeria Bursztynowa (Ostrołęka),
Galeria Sudecka (Jelenia Góra), Galeria Piła (Piła), Galardia
(Starachowice), Brama Mazur (Ełk) and Marcredo (Kutno).
Extension of existing centres remains one of the key and most
prospective trends, especially with regards to the older schemes.
Projects planned for enlargement in 2014-2015 include Galeria
Pomorska (Bydgoszcz), Ogrody (Elbląg), Atrium Copernicus
(Toruń), Magnolia Park (Wrocław), Gemini Park (Bielsko-Biała)
and Galeria Sudecka (Jelenia Góra).
Retail parks
The retail park sector is developing at a clearly slower pace than
shopping centres, with just 113,000 m2 delivered over the course
of 2013. Most notable deliverables encompass the extensions of
two IKEA-anchored parks (Wrocław – Bielany and Poznań –
Franowo), the opening of Europa Centralna in Gliwice, Marcredo
in Szczecin, Multishop in Sochaczew and Vendo Park in Nysa.
At the end of 2013, 75% of the existing retail park floor space in
Poland was located in the eight major agglomerations.
A marked trend is the development of small-sized retail parks in
smaller towns and construction of parks as an addition to existing
shopping centres, principally hypermarket-led schemes of the
older type.
Outlet Centres
Earlier in 2013, the Katowice agglomeration saw the completion
of the large Galeria Katowicka mall (located adjacent to the main
railway station in Katowice) and a mixed shopping centre and
retail park project, Europa Centralna, was delivered at the
junction of A1 and A4 motorways in the Gliwice suburbs.
Notable openings were also the case in mid-sized and smaller
cities, e.g. Galeria Trzy Korony (Nowy Sącz), Galeria Veneda
(Łomża), Galeria Solna (Inowrocław), Brama Pomorza (Chojnice)
and Stara Kablownia (Czechowice-Dziedzice).
The avarage density of shopping centres in Poland rose by 12 m2
over the course of 2013 to the level of 220 m2 / 1,000 inhabitants.
Until now, this retail format has been being developed only in the
largest agglomerations. However, the first outlets are currently
sprouting in the regional cities of eastern Poland. The Outlet
Center (12,000 m2) is under development in Lublin and is
followed by two additional projects proposed for Białystok.
Demand
Poland remains a sought-after destination for retailers, both those
entering the market and those already present but seeking further
expansion opportunities. In 2013, more than 30 new brands
launched operations in Poland. These included famous names
such as Louis Vuitton, Hollister, Sports Direct, Celio, Original
Marines, Only, Joop!, Tape a l’oeil, Bobbi Brown, Laura Ashley.
In addition, retail groups with wide portfolios of brands introduced
new concepts, e.g Sinsay (LPP Group), H.E. by Mango,
H&M Home. Others diversified their concepts, such as Empik
which launched Empik Express stores (100 to 200 m2), adjusted
to specific conditions of smaller cities and small-sized retail
schemes.
The segment of small retail parks, which is gathering pace across
the country, fosters the expansion of clothing discounters, such
as Pepco, KiK and NKD.
On the other hand, some retail operators decided to either
withdraw from the Polish market or to optimize their chains of
stores, e.g. Charles Voegele, Marrionaud, Jackpot & Cottonfield,
Wallis, KappAhl, LaSenza and Flo. This creates opportunities for
new entrants and for property managers to refresh the offer of
their assets.
Existing projects, with a good trading history, remain the most
widely chosen locations by retailers. The best performing
shopping schemes in major agglomerations still draw the
highest interest; however, good quality projects in smaller cities
are also gaining market recognition. With that said, owners of
assets perceived as secondary product or those located in more
competitive markets should be prepared for having to optimise
rental levels.
Prime shopping centre rents, which refer to a 100 m2 unit
earmarked for retailers from the fashion and accessories category
in a leading shopping centre, remained stable throughout 2013.
The highest rents are typically found in Warsaw, where they now
range between €85 and €100 m2/ month, which is a slight (5%)
increase on 2012, and is largely due to the number of
recommercialisations in Warsaw’s leading projects.
Investment market
The volume of transacted retail properties throughout 2013
reached €1.32 billion, the vast majority (€1.12 billion) of which
was finalised in H2 2013. The last quarter alone saw the closing
of €549 million. The most notable deals included:



the acquisition of Wola Park in Warsaw by Inter Ikea;
the acquisition of Galeria Kazimierz in Kraków by
Invesco (€180.4 million);
the acquistion of Charter Hall’s portfolio (Zakopianka in
Kraków, Borek in Wrocław, Turzyn in Szczecin, Arena
in Gliwice, and Dąbrówka in Katowice) by Tristan
Capital Partners (€174.5 million).
The shopping centre vacancy rate in the Polish cities greater than
200,000 residents stood at approximately 3.5% in mid 2013. This
corresponds to a slight (0.5%) increase in H1 2013. The greatest
stability was found in the markets of Warsaw, Szczecin, Łódź and
the Katowice agglomeration.
In addition to the aforementioned transactions, large acquisitions
that were concluded in the third quarter of 2013 contributed
greatly to the high retail investment volume over the second half
of the year. These included the largest single asset deal in 2013
in CEE, i.e. the sale of Silesia City Center (some €400 million,
Katowice), and the purchase of Galeria Dominikańska in Wrocław
by Atrium Real Estate (€151.7 million). Significantly, an 83%
increase in retail volume was reported compared to the
corresponding period of 2012.
Prime rents vs Vacancy rates
Transacted Investment Volume (Retail)
Vacancy and Prime rents
€millions
€/ m / month
2
120
7,0%
6,0%
5,0%
4,0%
3,0%
2,0%
1,0%
0,0%
100
80
60
40
20
0
Prime rent
Vacancy rate
3 000
2 700
2 400
2 100
1 800
1 500
1 200
900
600
300
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Jones Lang LaSalle, January 2014
Source: Jones Lang LaSalle, Q4 2013, Vacancy Rates – Polish Council of
Shopping Centres, H1 2013
Agata Sekuła
Head of Retail Investment
CEE
[email protected]
Anna Wysocka
Head of Retail Agency
National Director
[email protected]
Poland enjoys stable interest from investors. That trend is likely to
be maintained throughout 2014 and we expect retail investment
volume on a par with that in 2013. Further significant retail
acquisitions are expected to close as early as Q1 2014.
Patrycja Dzikowska
Research & Consultancy
Associate Director
[email protected]
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