CBRE has released findings of their first ever Warsaw and Krakow High Street Report. According to the study, Polish customers are now more inclined to shop in high streets than they were a few years ago.
“The shopping patterns related to spending free time have been changing and nowadays, many city streets with cafes, restaurants, new pubs and clubs attract not only tourists but also significantly more inhabitants. Polish customers are seeking new social experiences and fresh brands that are not available in the shopping centre offer,” said Katarzyna Urbaszek, Retail Property Negotiator at CBRE, one of the authors of the report.
CBRE has researched Warsaw’s most popular high streets including Chmielna, Nowy Świat, Plac Trzech Krzyży, Mokotowska, Plac Zbawiciela and Plac Konstytucji, Marszałkowska and Aleje Jerozolimskie. In Krakow CBRE research covered Floriańska, Rynek Głowny, Szewska and Grodzka.
CBRE has revealed that Warsaw high street retail sector is clearly benefiting from the lack of retail space in shopping centres. Developers that are seeking new locations for their projects have noticed the development potential of the high street retail market. Many tenants choose only high street locations to open their first store in the country.
High streets in Krakow differ from the ones in Warsaw, both in terms of scale and character. Krakow, which was visited by 9,25 million tourists in 2013, has streets surrounding the Main Square shaped in a specific way. As tourism is considered to be a driving force behind the development of high streets, this rule perfectly applies to Krakow.
However, the process of creating and effectively managing the dynamically changing urban environment within the high street is long and complicated. In Warsaw, in particular, there are a number of obstacles and issues that have a significant impact on further development.
The most crucial are: Lack of clear strategy relating to the management and development of each street; The diversified ownership structure; High levels of land and building prices; Properly organized traffic and parking
According to Beata Kokeli, Senior Director of Retail at CBRE: “Although there have been signs of on-going improvement emerging in the Polish retail sector over the last few years, much of this is being experienced in the Warsaw market or in key shopping centres and retail schemes. Over the last few years Warsaw’s high streets have become enriched by such brands as Salvatore Ferragamo, COS, Hebe, Green Caffe Nero, Tiger and Louis Vuitton. Every year CBRE notes around 30 new retailers entering the Polish market, the majority of which are choosing Warsaw as their point of entry. Depending on the brand’s strategy, there are those which locate their stores in shopping centres whilst others choose only high street locations.”
According to CBRE’s recent study, Warsaw and Krakow’s shopping streets are forecasted to continue their evolution.
In Warsaw CBRE expects that new retail streets will be formed, with Świętokrzyska being one of them. As the second metro line is scheduled to be completed by the end of 2014, Świętokrzyska Street is also about to undergo a major refurbishment, as a consequence of which it may retrieve its pedestrian character and attract both new tenants and new shoppers. Another location that may soon evolve into a shopping area is the far end of Marszałkowska Street, stretching from Zbawiciela Square to Unii Lubelskiej Square, an area, which does not yet resemble a high street.
Another future trend is refurbishment plans of old department stores and tenement houses to host retail tenants together with offices on the upper floors.
The Krakow high street area, which is organized around the Main Square and the surrounding streets, with Floriańska, Grodzka and Szewska Streets are also forecasted to undergo major changes. Despite the city’s popularity and attractiveness, there is still shortage in the number of international brands in Krakow, both from the accessories and fashion sectors. This results from the lack of adequate retail units that could host such tenants. However, the situation is gradually changing and investors have become more aware of the possibilities of the city, which is clearly visible by the growing number of renovation projects.
Warsaw is the most expensive retail location in Poland with prime rents at about €75-90 per sqm per month (for the best units of 100 sqm in a prime shopping centre) and average rents at €30-45 per sqm per month. High street rents for prime units reach €70-90 per sqm per month. The lack of available retail space increases the upward pressure on rents in the best locations, however average rents remain stable with the downward pressure, especially when high streets are concerned.
Magdalena Frątczak, Director of Retail, CBRE Poland, noted: “The ‘essentials’ of a successful retail destination – value, convenience, cleanliness and security – remain uppermost in shoppers’ minds. There must be a major change in approach from local authorities, developers and landlords to overcome number of obstacles and issues that have a significant impact on further development of high streets in main Polish cities.”
Katarzyna Kocon, Consultant, CBRE, added: “Convenience is still the consumer’s watchword; people like to shop locally and they want their shopping destinations to be easily accessible by car or convenient public transport. Our advice is to listen to what consumers want, concentrate on getting the basics right, and this will ultimately give Polish high streets the best chance of success.”