WHAT’S IN STORE FOR RETAIL AND WAREHOUSE
- Large retail projects in the pipeline for 2014 and beyond -
- Emerging hotspots on the warehouse map of Poland -
Warsaw, 5 December 2013 – Commercial property experts at CBRE, the world’s largest commercial real estate services company, say 2013 has been a very good year for Polish commercial real estate and look forward to an even more bullish 2014. With rising consumer spending, steady occupier demand and a group of international retail chains poised to enter the Polish market, prospects for 2014 and beyond look promising. There is a number of retail schemes currently under construction in Warsaw and large regional cities around the country, including Royal Wilanow (7,000 sqm., delivery planned for 2014), Atrium Felicity and IKEA in Lublin or Sukcesja in Lodz. Extensions of existing centres are a significant trend with a number of first and second generation schemes undergoing modernizations which will result in revamps and additions of an entertainment component. This is a way of meeting changing tastes among consumers, as brought to light in CBRE’s How We Shop survey. It found that they expect a complete “shopping experience” from a visit to a modern retail centre – besides buying fashion, consumer electronics and groceries, shoppers also want to be able to dine, relax or see a movie.
New retailers entering the Polish market often have a policy to open their stores in a prestigious location. Yet for those targeting Warsaw, the number of options is limited due to unmet demand for retail space and resulting vacancy rates in the most popular schemes close to zero. This is fueling the trend of refurbishing old department stores and tenement houses to host retail outlets with offices on upper floors, such as Chmielna 25 or Smyk in Warsaw. With the slow resurrection of some shopping precints in large Polish cities, there are high hopes for Swietokrzyska Street in Warsaw. The street is about to undergo a major refurbishment as the second metro line, with a station on the junction of Swietokrzyska and Jana Pawla Street, is scheduled for completion by the end of 2014. As a consequence, it may join the ranks of Mokotowska Street and Plac Trzech Krzyzy in Warsaw, Florianska Street in Krakow and Polwiejska Street in Poznan, as the most desirable high street locations with their own, unique character and tenant mix.
In 2013 to date 565,000 sqm. of new supply came to the market, bringing the total stock of modern retail space in Poland to 9,860,000 sqm.
Beata Kokeli, Senior Director, Head of Retail Agency, CBRE in Poland:
“In 2013 we have seen many openings of large shopping centres in Poland, which shows there is still demand from retailers for new premises, especially in large schemes situated in big cities. This is where consumers are affluent and have significant purchasing power. What is very interesting, is that even though the rate of footfall increase has fallen compared to last year (y-o-y decrease of 2.5% in September 2013), sales and turnover have increased (y-o-y by 4.1% and 6.6% respectively in September 2013). This may mean that customers now spend more during a single visit to a shopping centre and that they have embraced e-commerce.”
Magdalena Frątczak, Director, Retail Agency, CBRE in Poland:
“Rents for prime real estate look stable and should continue so throughout next year. They vary depending on city, with prime rates in Warsaw at an all-time high, going up to 120 EUR/sqm./month for small units. On average Warsaw rates can be as low as 32-45 EUR/sqm./month for units between 100 and 200 sqm. Supply has also been stable over the past couple of years, with modern retail stock rising annually by 5-7%. For 2013 the figure was 5%. This rate is expected to continue over 2014 and 2015, when supply should increase by 7% each year. An interesting trend is the spate of expansions – currently 15% of new supply is accounted for by expansions.”
In 2013 the Polish industrial and warehouse market performed well, however demand fell slightly in comparison to 2012. There was also a number of completions, which brought the total stock of modern warehouse space to 7.62 million sqm. Developers are starting to reconsider speculative supply, however only linked to critical size pre-lease contracts. Wroclaw and Poznan are expected to witness a strong increase in the level of development activity in the near future in connection with Amazon’s announcement that it will create three new logistic centres and owing to the cities’ convenient location close to Western European markets where an economic recovery is underway. The Silesia region is another hotspot on the warehouse map of Poland, while the East, with Lublin as its hub, is an upcoming opportunistic region. In general, take up has effectively slowed down compared to last year.
Patrick Kurowski, Head of Industrial & Logistics, CBRE in Poland:
“The macroeconomic outlook seems to be positive for forthcoming years, with forecast GDP growth in 2014 at 1.8%, so we can expect that this will boost demand for industrial and logistics properties. E-commerce is playing an increasing role, with robust figures not only for Poland but Europe as well. Warehouse requirements linked with e-commerce services (covering Poland and Pan-Europe) are therefore shaping demand for logistics properties. The Polish market has limited availability of units above 10,000 sqm., while in Europe there is growing occupier demand for space over 50,000 sqm. Such properties are particularly sought after by companies forming part of the supply chains that support growth in online retailing.”