Poland | Retail market SHOPPING CENTRES IN REGIONAL CITIES · the sale of Bielawa centres by Aerium...

Poland | Retail market

SHOPPINGCENTRESIN REGIONALCITIESBIAŁYSTOK, BIELSKO-BIAŁA, BYDGOSZCZ, CZĘSTOCHOWA, KIELCE, LUBLIN, OLSZTYN, RADOM, RZESZÓW, TORUŃ.

Q1 2019


INTRODUCTION 3

STOCK AND NEW SUPPLY 4

DEMAND AND VACANCY RATE

6

RENTAL RATES AND OTHER LEASE CONDITIONS

8

TRENDS 9

CONTENTS

3 Rynek handlowy | CENTRA HANDLOWE W MIASTACH REGIONALNYCH | 2019 | Colliers International3 Retail market | SHOPPING CENTRES IN REGIONAL CITIES | 2019 | Colliers International

2018 was not a time of intense activity among developers in large-size retail in regional cities. However, many renovations and modernisations of existing facilities were observed, especially in terms of their gastronomic offer. Small convenience shopping projects with an area of less than 5,000 m2 were built in regional cities, as well as standalone stores, both from the food and non-food sectors.

There are currently 70 shopping centres in the 10 cities under analysis supporting approximately 2.3 million consumers in total. On average, one shopping centre services 33,000 potential customers, and most of them are in Częstochowa and Toruń, and the least in Rzeszów and Lublin.

Based on GfK Polonia’s data on the purchasing power of people in regional cities (in most cases above the national average), it can be estimated that these markets have a total value of approximately PLN 80 billion per year. On average, the purchasing power of a regional city inhabitant ranges between PLN 25,000 and 40,000 annually. Statistically, with almost 2 million m2 of the existing space, there are PLN 42,000 annually per square metre of shopping centre in these locations – the most in Częstochowa and Olsztyn, and the least in Rzeszów and Lublin.

INTRODUCTION


Source: Colliers International, GfK, Central Statistical Office, 2018

TOTAL STOCK (m²)

1.9 million 70NUMBER OF SHOPPING CENTRES

TOTAL PURCHASING POWER OF INHABITANTS (PLN)

79 billion

ANNUAL AVERAGE PURCHASING POWER PER CAPITA (PLN)

33,730

SPACE UNDER CONSTRUCTION (m²)

9,000

NUMBER OF SCHEMES UNDER CONSTRUCTION

2

VACANCY RATE (%)PRIME RENTS (EUR/m²/MONTH)

1.0-6.7 24-30

2.3 millionTOTAL POPULATION

NUMBER OF REGIONAL CITIES

10

4 Rynek handlowy | CENTRA HANDLOWE W MIASTACH REGIONALNYCH | 2019 | Colliers International

There are 70 schemes operating in regional cities with an area of approximately 1.9 million m2 of shopping centre space, which accounts for almost 17% of the total stock in Poland. The largest retail market is Lublin (14 properties), while the smallest is Olsztyn (121,000 m2 in 5 schemes). The density of retail shopping centres in regional cities is highly diverse – from 600 m2/1,000 inhabitants in Radom and Częstochowa to over 1,000 m2/1,000 inhabitants in Rzeszów, Bielsko-Biała and Lublin.

Similarly to the entire Poland, the traditional shopping centre is the dominant format in regional cities, accounting for 90% of total stock. There are approximately 110,000 m² of retail park space in smaller cities, the most being in Lublin and Białystok. In Białystok, Lublin, Bydgoszcz and Rzeszów, outlet centres operate with a total area of 72,000 m².

In 2018, moderate real estate development activity was recorded in regional cities. In total, less than 20,000 m² of shopping centre space was delivered to the market. The SMART Outlet in Bydgoszcz (11,000 m²) was the largest new facility to open in regional cities. Developers focused mainly on the modernisation of existing centres. Renovations were finished in Auchan Produkcyjna in Białystok, Auchan Rejewskiego in Bydgoszcz, Bielawy SC in Toruń, Lublin Plaza in Lublin as well as E.Leclerc in Radom.

STOCK AND NEW SUPPLY


STOCK (M2 GLA*)

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000

0 2 4 6 8 10 12 14 16

*Gross leasable areaSource: Colliers International, January 2019

Traditional shopping centre Retail park Outlet centre Number of schemes

BIAŁYSTOK

BIELSKO-BIAŁA

BYDGOSZCZ

CZĘSTOCHOWA

KIELCE

LUBLIN

OLSZTYN

RADOM

RZESZÓW

TORUŃ

4 Retail market | SHOPPING CENTRES IN REGIONAL CITIES | 2019 | Colliers International

Shopping centre City GLA*

(m2)Completion

year Owner

Atrium Felicity Lublin 75,000 2014 Atrium Poland

Real Estate

IKEA Skende Shopping Lublin 57,500 2017 INGKA Centers

Zielone Arkady Bydgoszcz 51,000 2015 ECE

Galeria Warmińska Olsztyn 41,500 2014 NEPI Rock

Castle

Tarasy Zamkowe Lublin 38,000 2015 Immofinanz

Group

Galeria Jurowiecka Białystok 25,000 2015 PB Konstanty

Strus

SMART Outlet Bydgoszcz 11,000 2018

ADV Por Property

Investment*Gross leasable area

Source: Colliers International, January 2019

THE BIGGEST SHOPPING CENTRES IN REGIONAL CITIES COMPLETED IN THE YEARS 2014-2018

NEW SUPPLY AND SPACE UNDER CONSTRUCTION (M2 GLA*)

*Gross leasable areaSource: Colliers International, January 2019

BIAŁYSTOK

BIELSKO-BIAŁA

BYDGOSZCZ

CZĘSTOCHOWA

KIELCE

LUBLIN

OLSZTYN

RADOM

RZESZÓW

TORUŃ

Supply in 2018 Space under construction

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

Developers’ activity in regional cities will remain moderate in the medium term and will mainly cover modernisations, extensions and constructions of small convenience shopping centres. At the end of 2018, approximately 10,000 m² in total were under construction in these locations. Plaza Park in Kielce with an area of 5,500 m² was the largest shopping centre under construction, which is being built as a convenience retail project in a large residential investment.

Several portfolio purchases were made by investors last year, for example shopping centres in cities including Toruń, Radom, Częstochowa, Kielce and Olsztyn. The largest retail transactions included the sale of Bielawa centres by Aerium Group to Newbridge and Aura Centrum in Olsztyn via Rockspring to NEPI/Rockcastle. Also, four shopping centres from the portfolio of 28 properties purchased by Chariot Top Group from Ares/AXA/Apollo Rida are in regional cities. These centres will be systematically taken over by EPP in the coming years.

DENSITY OF SHOPPING CENTRE SPACE (M2/1,000 INHABITANTS)


Density

BIAŁYSTOK

BIELSKO-BIAŁA

BYDGOSZCZ

CZĘSTOCHOWA

KIELCE

LUBLIN

OLSZTYN

RADOM

RZESZÓW

TORUŃ

0 200 400 600 800 1,000 1,200 1,400

769

1,142

709

593

782

1,137

699

598

1,262

681




The stable situation in regional markets means that the demand for space in shopping centres is mainly reflected in recommercialisation transactions (new leases, extensions and relocations). The number of retail chain debuts in these markets is very limited.

The largest transactions recorded in 2018 were those leased in SMART Outlet in Bydgoszcz, including: Media Expert, Home & Deco, Martes Sport and CCC. The commercialisation of the Skende Shopping in Lublin continued last year, which included store openings by Go Sport, TK Maxx and Diverse.

New fashion stores opened in Outlet Białystok (Guess), Zielone Arkady in Bydgoszcz (Desigual), Millennium Hall in Rzeszów (Mango) and Plaza Lublin (Sinsay, 4F, Kazar and Wojas). Another highlight of the year was the opening of the first e-obuwie.pl store in regional markets in Galeria Rzeszów. In 2018, chains such as Hebe (Galeria Pomorska and Auchan in Bydgoszcz), Smyk (Tarasy Zamkowe Lublin), KiK (Galeria nad Potokiem in Radom), Jysk (Tatary RP in Lublin) and Maxi. Zoo (Galeria Olimp in Lublin) were active in regional cities.

Concepts from the entertainment and leisure sector also developed in regional cities – Cityfit fitness

DEMAND AND VACANCY RATE

VACANCY RATE (%)


Vacancy rate

BIAŁYSTOK

BIELSKO-BIAŁA

BYDGOSZCZ

CZĘSTOCHOWA

KIELCE

LUBLIN

OLSZTYN

RADOM

RZESZÓW

TORUŃ 1.2

1.1

1.6

1.0

3.3

1.9

6.7

2.9

1.3

3.1

0 2 4 6 8 10


clubs were opened in Toruń Plaza and Lublin Plaza, and Just Gym in Tatary RP in Lublin. Interesting events included the opening of a rope park with an area of 6,500 m² in the vicinity of Gemini Park in Bielsko-Biała.

The growing popularity of eating out is causing an increase for demand for food and beverage outlets in shopping centres also in regional cities. 2018 saw the opening of McDonald’s in Gemini Park in Bielsko-Biała, Costa Coffee in Millenium Hall in Rzeszów (debut in the market), Meet & Fit in Atrium Felicity and Jumi Zumi in Zamkowe Tarasy in Lublin.

Vacancy rates vary depending on the market. At the end of 2018, the highest vacancies were noted in Częstochowa (6.7%) and Lublin (3.3%), and the lowest in Olsztyn (1%) and Rzeszów (1.1%). The change of food operators, the increase in demand from non-food discounters and the development of entertainment and leisure concepts are influencing vacancy rates.

POPULATION PER SHOPPING CENTRE

Source: Colliers International, Central Statistical Office, 2018

BIAŁYSTOK

BIELSKO-BIAŁA

BYDGOSZCZ

CZĘSTOCHOWA

KIELCE

LUBLIN

OLSZTYN

RADOM

RZESZÓW

TORUŃ

Number of inhabitants in the city Number of inhabitants per shopping centre

0 100,000 400,000300,000200,000

ANNUAL PURCHASING POWER (PLN) PER M2 OF SHOPPING CENTRE

Source: Colliers International, GfK, 2018

Purchasing power per m2 of shopping centre

60,00040,00020,0000

40,471

34,700

46,977

57,190

44,962

30,143

51,844

42,746

26,350

49,356

BIAŁYSTOK

BIELSKO-BIAŁA

BYDGOSZCZ

CZĘSTOCHOWA

KIELCE

LUBLIN

OLSZTYN

RADOM

RZESZÓW

TORUŃ




Rental rates in regional cities are showing a slightly downward trend. The highest rents, for 100-150 m² for the fashion sector in a prime shopping centre, are EUR 28-30 m²/month in Bydgoszcz and EUR 24-26 m²/month in Radom and Częstochowa.

Market practice, also in regional cities, is becoming more flexible in terms of leases. Strategic tenants for a centre are being offered incentive packages that include participation in fit-out costs, leases based only on turnover, shorter rental periods, temporary reductions and freezing of service charge costs.

New legal regulations introduced in Poland last year, including a gradually implemented trading ban on Sundays, may bring changes in lease conditions in the near future.

RENTAL RATES AND OTHER LEASE CONDITIONS

RENTAL RATES (EUR/M2/MONTH)

23 25 27 29 31

Source: Colliers International, January 2019 Rental rate level

BIAŁYSTOK

BIELSKO-BIAŁA

BYDGOSZCZ

CZĘSTOCHOWA

KIELCE

LUBLIN

OLSZTYN

RADOM

RZESZÓW

TORUŃ

26-28

26-28

26-28

26-28

26-28

28-30

24-26

24-26

24-26

24-26




Last year, renovations and modernisations were particularly visible in regional cities, and property owners are consistently announcing changes. This phenomenon is a natural consequence of the shopping centre stock aging, which were completed at the end of the 1990s. The modernisations of food courts are worth mentioning, which result from a slow change in consumer behaviour with eating out becoming popular not only in the largest agglomerations. An example of a successful change in this regard was Bielawy shopping centre in Toruń.

The second wave of interest in regional cities is coming from homeware and DIY chains. In 2018, a new Leroy Merlin store in Olsztyn and an Agata in Lublin were opened, while in 2019 a Castorama will open in Bydgoszcz and a Bricomarche in is due to be completed in Kielce. DIY chains are becoming important tenants in shopping centres, also in smaller urban centres.

Changes and modifications of formats introduced by leading retail chains are challenges that have been faced by shopping centres for a few years. Examples of relocations and space enlargements

TRENDS

include CCC in Galeria Echo in Kielce (from approximately 670 m² to 1,080 m²). This trend was clearly visible in 2018 and will continue.

The retail market in regional cities, as in the largest agglomerations, is changing due to the rapid development of e-commerce. A clear signal was the opening of the first e-obuwie.pl store in a regional market in Galeria Rzeszów last year. Also, IKEA is expanding its multichannel service to new cities (a new collection point at Auchan Produkcyjna in Białystok). It should be expected that offline and online shopping will become increasingly available also for consumers in regional cities.

The expansion of new discount non-food chains has also reached regional cities. TEDi stores were opened in Bielsko-Biała and Radom, Dealz in Kielce and Action in Częstochowa. Rapid development is observed in these locations among chains already present on the Polish market, such as Pepco and KiK. This group of low-budget tenants will create demand for space in shopping centres in regional cities in the coming years.


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CONTACT

RESEARCH AND CONSULTANCY SERVICES

Dominika JędrakDirector+48 666 819 [email protected]

Katarzyna Michnikowska Assocciate Director +48 607 559 587 [email protected]

Colliers InternationalPl. Piłsudskiego 300-078 Warszawa

Copyright © 2019 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No resposibility is assumed for any inaccuracies. Readers are encouraged to consult their profesional advisors prior to acting on any of the material contained in this report.

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