JLL has released its Warsaw City Report Q1 2014. The research spans the office, retail, industrial and residential markets and is supplemented with analyses of the investment market and economy. Below are the report’s major research findings concerning the retail market in the Warsaw agglomeration.
The Warsaw agglomeration remains Poland’s largest retail market, accommodating over 1.1 million sqm of shopping centre stock, and accounting for 13 percent of the shopping centre space available in the country. However, the Warsaw region, with the shopping centre density ratio of 438 sqm per 1,000 residents, remains less saturated than most of the other major agglomerations, and is behind Poznań (621 sqm), Wrocław (584 sqm), Tri-City (507 sqm), Łódź (490 sqm) and Kraków (486 sqm). In fact, the city is only ahead of Szczecin (421 sqm) and Katowice (420 sqm). With regard to the retail supply pipeline, the situation is unlikely to change in the short-term.
Warsaw is also a good example of a city whose retail offer doesn’t reflect the purchasing power of its residents. Warsaw agglomeration residents have the highest purchasing power (€9,706 per capita per annum) in Poland, exceeding the national average by 65 percent. As a comparison, Poland’s average is €5,870 per capita per annum, according to GFK Polonia).
Anna Wysocka, Head of Retail Agency, JLL, said: “Currently, development activity in the Warsaw agglomeration is very low. Only one project is under construction, Galeria Legionowo, which is scheduled to open in Spring 2015. This situation, however, is likely to change in the mid to long-term with approximately 200,000 sqm expected to come onto the market by the end of 2016. Interestingly, nearly 20 percent of this will come via extensions, i.e. Centrum Janki and Wola Park.”
New completions will include two regional GTC projects (Galeria Wilanów – 77,000 sqm and Galeria Północna – 60,000 sqm), Ferio Wawer (12,500 sqm), and a number of centrally located, smaller mixed-use projects, including Ethos (approximately 3,000 sqm of retail area), CEDET (9,000 sqm), Hala Koszyki (7,500 sqm) and Nowy Sezam (4,800 sqm).
Modernisations and extensions of existing retail assets remain the key and most prospective trends in Poland. This is particularly prominent in Warsaw where 28 out of the 36 trading shopping centres are more than 10 years old. So far, over 60 percent of the capital’s shopping centre stock has been modernised. After the recent remodelling of the Klif centre, food court area’s facelift and extension in Galeria Mokotów and remodeling in Blue City, similar improvements are taking place in other Warsaw centres: Arkadia and Galeria Wileńska.
“Warsaw’s high street market is gradually evolving. This development is being driven by infrastructural improvements in the core city centre, which includes a new metro line development that will become operational by the end of this year, new retail projects in the pipeline, like Ethos on Plac Trzech Krzyży, CEDET and Nowy Sezam, as well as an improving restaurant offer in central Warsaw. Given all the factors above, we expect activity in the high street area to increase markedly over the mid to long term,” Anna Wysocka added.
Despite considerable volume, the available stock is still well absorbed by the market. This is reflected in one of the lowest vacancy rates nationwide. High demand for modern retail space in prime centres in Warsaw has pushed the vacancy rate down to 1.5 percent in January 2014 (vs. 2 percent in H1 2013). A couple of new international and domestic brands have opened on the Warsaw market recently: German NEO and the first regular Desigual store in Arkadia, Versace Collection, Lidia Kalita and Bohoboco in Klif, Bizuu in Galeria Mokotów and Tomaotomo in Plac Unii City Shopping.
Currently, for a fashion sector tenant, prime rents for a 100 sqm unit, located in a leading shopping centre in Warsaw, stand at approximately €85 to €100 sqm per month. Due to the ongoing re-commercialisation of key retail assets, JLL expect prime rents to increase by approximately 5 percent over the remainder of 2014. Prime high streets remain stable and fluctuate between €80 and €95 sqm per month, subject to location.
