Download Warsaw Retail Market

Warsaw Retail
MarketView
CBRE Global Research and Consulting
Q3 2014
NEW CENTRES
UNDER CONSTRUCTION

AVERAGE RENTS



NEW BRANDS
GENERAL OVERVIEW
Market trends
Polish economy
Q3 2014
Population

The GDP growth amounted to 1.6% in 2013, tied for seventh highest in the
EU, although the result was the lowest since 1.4% tallied in 2002. The Central
Bank of Poland announced that the country’s GDP grew at the rate of 3.3% at
the end of the second quarter of 2014. Initial projections indicate that the
GDP growth will fall below 3% in the third quarter, though the 3.2% Y-o-Y
growth forecast for the year is expected to be met. A general improvement of
the labour and investment markets is considered a major catalyst for this
development. Inflation has remained persistently low at a level of -0.3% in the
third quarter. The reference interest rate have been decreased in October and
currently stand at 2%.

In the first three quarters of 2014, investment volume in the commercial
property sector amounted to nearly EUR 2.1 billion, including over EUR 412
million in the retail sector. The most significant retail transactions took place in
the first half (Poznan City Center, Nova Park, Galeria Mazovia, Galeria Hexa).

Yields in the retail sector remain stable and amount to 5.9% for prime assets
and about 7.5% for retail warehousing schemes.

The total modern retail space in Warsaw agglomeration amounts to 1.4
million sq m. From the several types of schemes present on the market, the
most popular are shopping centers with hypermarket or supermarket as an
anchor tenant, however the most attractive for retailers are third generation
schemes (Zlote Tarasy, Arkadia, Galeria Mokotow).

For the new retailers entering the Polish market with the policy to locate their
stores in one of the prestigious locations, the number of options is limited. In
terms of available space in modern shopping centres, vacancy rate level in
general amounts to 2.7%, however it varies depending on the shopping centre
category. The highest rate is registered in second category schemes, where
40-50% of the total GLA of the scheme are retail units, typically
complemented with a supermarket or a small hypermarket.

The availability of retail units in prime shopping centers is limited only to
single units. On the other hand, the vacancy in specialized projects, such as
outlet centers, theme centers or retail park is relatively higher than average.

In terms of new developments, there are three new centers currently under
construction (Galeria Lopuszanska, Ferio Wawer and Royal Wilanow), two
extensions (Factory Ursus and Wola Park) and additional six under advanced
conceptual works.

In addition to modern retail schemes, locations along high streets are
becoming popular. Among the best and the most recognizable Warsaw’s high
street locations are Nowy Swiat Street, Trzech Krzyzy Square, Mokotowska and
Chmielna Streets, each having its unique character and tenant mix.
38.5 m
GDP growth (2015 forecast)
3.2%
CPI (y-o-y, September 2014)
-0.3%
Reference interest rate
2.0%
Unemployment rate (September
2014)
Source: GUS, NBP, Oxford Economics
11.5%
Warsaw retail market
Q3 2014
Total stock (sq m)
1.4 m
Completions (sq m)
0
Under construction (sq m)
58,780
Vacancy rate
2.7%
Retail investment volume
(YTD)
EUR 412.5 m
Total investment volume
(YTD)
EUR 2.1 b
Market outlook
2015 Outlook
1
New supply

Vacancy rate

New entries

Average rents

Prime yields

Source: CBRE
Q3 2014 Warsaw Retail | MarketView
RETAIL MARKET
Retail indicators
Shopping centre supply in Warsaw
(in mln EUR per 1,000 inhabitants)
(’000 sq m)
Planned
Under construction
Consumer spending per capita
Household disposable income per capita
Existing
9
8
7
6
5
4
3
2
1
0
180
160
140
120
100
80
60
40
20
0
Source: CBRE
Source: Oxford Economis, October 2014
Prime and average rents
Shopping centre vacancy in Warsaw
(EUR/sq m/month)
(by generation)
Shopping centres
High streets
Prime
80 - 110
70 - 85
Average
25
20
I generation
II generation
III generation
Specialized
Outlook
Source: CBRE
0%
1%
2%
3%
4%
5%
6%
Source: RRF, CBRE
Under construction
Building permit
Planned
Royal Wilanow
Fabryka Wolomin
Forum Bemowo
Ferio Wawer
Galeria Kabaty
Hala Koszyki
Galeria Wilanow
CEDET
Galeria Bialoleka
Cenrum Marszalkowska
Wilanow Park
Factory Ursus (extension)
Galeria Lopuszanska
2
Wola Park (extension)
7%
Q3 2014 Warsaw Retail | MarketView
WARSAW HIGH STREET MAP
Nowy Swiat
Chmielna
Mokotowska
Marszalkowska
Trzech Krzyzy Square
Konstytucji & Zbawiciela Squares
Aleje Jerozolimskie
Chosen high street stores
3
Tenant
Category
Tenant
Category
Burberry
Fashion
Muji
Accessories
Smyk
Children & Maternity
Hagen Dazs
Cafes, restaurants
Louis Vuitton
Fashion, accessories
Charlotte
Cafes, restaurants
Zien
Fashion
Frey Wille
Jewellery
COS
Fashion
Zara
Fashion
Q3 2014 Warsaw Retail | MarketView
RESEARCH DEFINITIONS
Retail space GLA - gross lettable area in sq m refers to the area leased to tenants and includes any other construction elements.
Shopping gallery - part of a shopping centre encompassing a number of adjacent shop units that are all accessible from a mall.
Hypermarket - either a stand alone or part of a shopping centre, large-scale store (with a minimum GLA size of 2,000 sq m) offering a wide variety of convenience and
household products.
Shopping centre - a scheme that is planned, built and managed as a single entity, comprising units and 'communal' areas, with a minimum GLA of 5,000 sq m, usually a group
of at least 10 shops and service units. Shopping centre schemes can vary in terms of the concept, from the centres where a hypermarket occupies 40-50% of the total GLA to the
schemes dominated by other than retail commercial functions.
Factory outlet - is a shopping centre where manufacturers and retailers sell their merchandise at discount or gross prices.
Retail park - is a consistently designed, planned and managed scheme that comprises of medium- and large-scale specialist retailers (“big boxes” or “retail warehouses”) as well
as a shopping centre.
Prime headline rent (in Euro per sq m) represents the top open-market tier of rent that could be expected for a unit of standard size commensurate with demand in each
location, of highest quality and specification and in the best location in a market at the survey date. For purposes of this report, a retail unit of standard size is assumed to be around
100 sq m GLA.
Prime yield (in %) calculated as net rent / net price (excl. transaction costs) = cap. rate. A prime yield is derived from the gross rental income (before deducting all nonrecoverable expenditures) divided by total purchase costs (excluding price, costs and taxes). The prime yield represents the yield that an investor would receive when acquiring a
grade/class A building in a prime location, which is fully let at current market value rents. Prime Yield should reflect the level at which relevant transactions are being completed in
the market at the time but need not be exactly identical to any of them, particularly if deal flow is very limited or made up of unusual one-off deals. If there are no relevant
transactions during the survey period, a hypothetical yield should be quoted, and is not a calculation based on particular transactions, but it is an expert opinion formed in light of
market conditions, but the same criteria on building location and specification still apply.
Investment volume (in EUR million) - investment transactions only. For this reason transactions by owner-occupiers are excluded from investment volumes. Transactions
involving owner-occupiers, retailers or corporates buying for the purpose of owner-occupation are not seen as investments deals. We also do not include pure land deals.
CONTACTS
Research & Consultancy
Retail Agency
Joanna Mroczek
Beata Kokeli
Director
Rondo ONZ 1
00-124 Warsaw
t: +48 22 544 8061
e: [email protected]
Senior Director
Rondo ONZ 1
00-124 Warszawa
t: +48 22 544 8033
e: [email protected]
Capital Markets
Magdalena Fratczak
Director
Rondo ONZ 1
00-124 Warsaw
t: +48 22 544 9304
e: [email protected]
Mike Atwell
Senior Director
Rondo ONZ 1
00-124 Warsaw
t: +48 22 544 8070
e: [email protected]
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Research and Consulting
This report was prepared by the CBRE Poland Research & Consulting Team which forms part of CBRE Global Research and Consulting – a network of preeminent researchers and
consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe.
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have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This
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