Extensions and small schemes lead the market

Transcription

1 DTZ Research PROPERTY TIMES Extensions and small schemes lead the market Poland Retail, H August 2015 Contents Macroeconomic background 2 Supply 3 Demand 5 Vacancy and rents 5 Definitions 6 At the end of H the total amount of modern retail stock (definition available on p. 6) in Poland exceeded 12.9 million sq m of GLA. New supply in H was limited to a bare 183,000 sq m of GLA in seven new schemes and nine extensions of existing schemes. Importantly, 4 of new stock was provided in extensions of existing schemes, reflecting the clear market trend of remodelling and extension of the existing retail properties with established market positions. Shopping centres still make up the majority of recently completed stock, taking up 83% of newly delivered space. Only 1 of new supply delivered was located in Poland s eight major agglomerations. New schemes were developed in secondary cities as well as smaller towns with less than 50,000 inhabitants. A sizeable volume of new stock (481,000 sq m) is expected to be delivered to the market by the end of H The vast majority (approximately 7) of new supply will be developed in the shopping centre format. 867,000 sq m of new supply is currently under construction with opening dates planned for the coming 2.5 years. Still, developers interest in large cities and agglomerations is evident: 6 of future supply will be developed in Poland s eight major cities. A growing number of extensions, redevelopments and remodelling activities result from the need to adapt to the changing environment including intensifying competition and changes of consumer habits. Author Patrycja Dzikowska Associate, Consulting & Research patrycja.dzikowska@dtz.com Prime rents in the leading markets remain stable. There is a clear downward pressure on rental levels in secondary and tertiary cities, particularly for older schemes with limited offerings in their shopping centres. Figure 1 New supply by size of the city ( 000 sq m) Contacts Kamila Wykrota, Consulting & Research kamila.wykrota@dtz.com Magali Marton Head of EMEA Research magali.marton@dtz.com, (f) - forecast Property Times 1

2 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Poland Retail, H Macroeconomic background Economic growth and inflation In the first quarter of 2015 the Polish economy has continued to grow steadily, achieving a GDP increase of 3. y-o-y, compared to 3. registered in the first quarter of (fig.2). This was driven mainly by the further rise of domestic demand, bolstered by the increase in private consumption levels by 3.1% and a dynamic surge in enterprises investment by 11.. The Polish PMI index increased in June by 1.9% and amounted to 54.3%, which resulted from the increase in industrial production output, the amount of new orders as well as higher consumer demand. Also, as a consequence of lower unemployment and rising purchasing power, the Current Consumer Confidence Indicator 2 published by the Central Statistical Office of Poland, surged by 3.2 percentage points in June and amounted to -10.4, which was the best result since September GDP growth is expected to continue in the second half of However, due to external factors such as the uncertainty of the Greek bailout program and Russian embargo on some EU products, the forecasts for 2015 fluctuate around % 3. Due to a significant decrease in oil and food prices in Poland, deflation of 1.5% in Q has been noted. Currency exchange In the first half of 2015, the Polish zloty depreciated against the Euro and the US dollar, achieving the level of 4.16 PLN/EUR and 3.76 PLN/USD as of 30 June The weakening of the Polish currency resulted to a large extent from external factors, such as the removal of the currency peg between the Swiss franc and Euro by the SNB and the quantitative easing program introduced by the ECB in January Retail sales In the first quarter of 2015, constant-price retail sales in Poland grew by 4. y-o-y, which constituted an increase compared with 2.9% y-o-y in This growth was a consequence of improved consumer sentiment, which resulted from the decrease of unemployment and rising salaries. Labour market Compared to the end of 2014, the unemployment rate decreased by 1.2 percentage points and amounted to 10.3% as of the end of June 2015 (fig.4). This was followed by an increase in average salary levels in the enterprise sector, which rose in nominal terms by 4. y-o-y and equaled 4,054 PLN gross as of the end of the first quarter of 2015 (fig. 4). Due to deflation, the purchasing power of the average salary was 5.7% higher than in the corresponding period of According to NBP forecasts, the unemployment rate is expected to decrease further in H2 2015, which will be triggered mainly by an increase of economic activity. Figure 2 GDP growth and inflation rate in Poland 7% 5% 3% 1% Source: National Bank of Poland, (f) - forecast Figure 3 Retail sales growth in Poland Source: Central Statistical Office Figure 4 Average monthly salary in the enterprise sector (PLN) and unemployment rate in Poland GDP growth Retail sales Salary Source: Central Statistical Office Inflation rate Industrial output Unemployment rate (RHS) Central Statistical Office of Poland 2 Consumer Confidence Indicator shows the monthly change in the consumer perception of their financial situation 3 Official GDP growth forecast, Polish budget Act for Property Times 2

3 Supply H ended with the total modern retail supply exceeding million sq m of GLA. 73% of the total stock comprises of shopping centres/ shopping & leisure centres (9.4 million sq m) followed by stand-alone retail warehouses (1, 2.32 million sq m) and retail parks (, 1 million sq m). Factory outlets have a 1.5% share in the market, covering 202,000 sq m (fig. 5). New supply in H was limited and amounted to a bare 183,000 sq m GLA. Six new schemes were delivered to the market, while 4 of new stock was provided in extensions of existing schemes. Shopping centres still make up the majority of recently completed stock, taking up 83% of newly delivered space. New schemes were developed in secondary cities as well as smaller towns below 50,000 inhabitants, e.g. Galeria Sudecka in Jelenia Góra, Galeria Neptun in Starogard Gdański, Corso in Świnoujście, Galeria Sanok in Sanok, Galeria Głowno in Głowno and Era Park in Wieluń. Clearly, large-scale retail parks are not a priority for developers, while small schemes, in the form of strip malls, have become a format marketable for small towns or residential clusters in major agglomerations. The retail format of small schemes, tailored to the shopping needs of local communities, fills the niche in the market perfectly. Since the beginning of 2013 approximately 160,000 sq m GLA was developed in small-sized retail schemes (around 10,000 sq m GLA or smaller) in cities inhabited by less than 200,000 residents. This segment of the retail market has been steadily consolidating and within the next 2.5 years, a further 180,000 sq m of GLA would be delivered. Only 1 of new supply delivered in H was located in Poland s eight major agglomerations: two extensions of existing schemes (Magnolia Park in Wrocław and Morena in Gdańsk). Cities with a population of between 200 and 400 thousand inhabitants absorbed a 3 share in new supply. The largest supply increase was in Lublin, where 38,000 sq m was completed in its Tarasy Zamkowe shopping centre. The size of Atrium Copernicus in Toruń was doubled and the offer strengthened with a wide selection of new brands. A large portion of new stock (3) was delivered in cities with a population below 50,000 inhabitants, thus reflecting the strong interest of developers in small markets Galeria Neptun in Starogard Gdański, Galeria Corso in Świnoujście and the Galeria Sudecka extension in Jelenia Góra. 867,000 sq m of new supply is currently under construction with opening dates planned for 2015, 2016 and Despite the high density levels the developers interest in large cities and agglomerations is evident. Over 6 of the supply under construction is located in eight major cities and a further 17% is located in cities with populations of between 200 and 400 thousand inhabitants. The shopping centre sector will be further strengthened; within the next 2.5 years over 8 of new supply will be provided in shopping centres of various types. Table 1 Major completions in H Scheme City GLA (sq m) Developer Tarasy Zamkowe Lublin 38,000 Immofinanz Galeria Neptun Centrum Ogrody Magnolia Park Atrium Copernicus Galeria Sudecka Starogard Gdański 25,000 Galeria Neptun Sp. z o.o. Elbląg 22,500 CBRE GI Wrocław 16,600 Blackstone Toruń 15,000 Atrium RE Jelenia Góra 10,600 Echo Investment Galeria Corso Świnoujście 10,000 Winston sp. z o.o. Figure 5 Retail stock by format as at end of H Figure 6 1 Annual supply of retail parks ( 000 sq m), (f)-forecast 1% Shopping centre 73% Stand-alone retail warehouse Retail park Factory outlet Property Times 3

4 Almost 7 of the new shopping centre space will be added in medium-sized and large shopping centres, defined as schemes with a GLA between 20,000 and 75,000 sq m. 63% of the new shopping centre stock is being constructed in the eight major agglomerations, which reflects developers confidence in the potential for further growth of the leading markets. The largest projects in the pipeline include Posnania shopping centre in Poznań, Wroclavia in Wrocław, Zielone Arkady in Bydgoszcz, Sukcesja in Łódź, Forum Gdańsk and Galeria Metropolia in Gdańsk and an extension of Park Handlowy Bielany in Wrocław. A sizeable portion of new stock - 481,000 sq m - is expected to be delivered to the market by the end of H (fig.1). The vast majority (approximately 7) of new supply will be developed in the shopping centre format. Retail parks and stand alone retail warehouses will comprise 1 of new stock each. Notably, almost half of the new stock in H will be added to the largest markets of major agglomerations, both in new schemes as well as in extensions of existing assets. Almost 150,000 sq m of GLA is being developed in cities with 200, ,000 inhabitants, substantially increasing the density figures in these areas. Figure 7 Retail stock under construction allocation by retail format Figure 8 7% 1% 8 Shopping centres Retail parks Retail Warehousing Outlet centres Retail stock split by format and market size ( 000 inhabitants) Smaller markets in cities below 50,000 inhabitants are still growing. Along with the increasing maturity of the retail market in Poland, shopping centre owners face new challenges and threats. Intensifying competition and changes in consumer habits force older schemes to catch up in this changing environment, resulting in a growing number of extensions, redevelopments and remodelling processes occurring. Some of the schemes are being currently redeveloped or extended, e.g.: Centrum Bielany in Wrocław, Factory Ursus in Warsaw, Supersam in Katowice and Galeria Pomorska in Bydgoszcz. For a long time, the highest retail market density among the eight major agglomerations has been recorded in Poznań (973 sq m per thousand inhabitants), followed by Wrocław (898 sq m), while the average in this group of cities reaches 734 sq m (fig. 9). Figure 9 Retail market density in major agglomerations (sq m / 1,000 inhabitants) Among secondary cities, the highest density is noted in Lublin. After opening a new, large shopping centre, the density in this market soared to 1,189 sq m of GLA per 1,000 inhabitants, and thereby surpassed the remaining cities in these terms. The average in this pool of cities is 825 sq m per 1,000 inhabitants. In the second half of 2015 the level of competition and density in Bydgoszcz will surge up to 879 sq m per thousand inhabitants, resulted from the opening of Zielone Arkady shopping centre in the city. Property Times 4

5 Warsaw Szczecin Łódź Average for 8 aggl. Wrocław Tricity Kraków Poznań Silesia Lublin Białystok Average secondary cities Toruń Kielce Radom Częstochowa Bydgoszcz Poland Retail, H Demand Sound economic fundamentals (growing GDP and retail sales, improving Consumer Confidence, declining unemployment rate) and a concreted customer base in the Polish market have nurtured interest from new brands. Nevertheless, the pace of new entries was slower than in 2013 in 2014, partly because of the lack of high-quality vacant space in prime properties in Warsaw, which is traditionally a bridgehead for rolling out across Poland. Among new brands in Poland are SuperDry, atab, Courir, Sportissimo and Dairy Queen. On the other hand, a number of retailers have started to reevaluate their chains of stores. They are carefully examining the performance of their portfolios and closing underperforming locations. Following 2014 patterns, the retailers expansion in 2015 is strongly dependant on the type of retail schemes completed. Due to the intensive small retail park format development focused mainly on smaller cities chains such as CCC, Jysk, Media Expert, Deichmann, Pepco, Rossmann, RTV Euro AGD, Neonet, KiK and Martes Sport will further expand their operations over the coming years. Many retail chains (especially well known-fashion anchors) indicate that a lack of available space in the best shopping centres in Poland is a major obstacle to their expansion in the country. Table 2 Major schemes under construction Scheme City GLA (sq m) Developer Date of opening Posnania Poznań 95,000 Apsys 2016 Wroclavia Wrocław 71,000 Unibail 2017 Forum Gdańsk Gdańsk 62,000 Multi Development 2017 Zielone Arkady Bydgoszcz 51,000 ECE 2015 Sukcesja Łódź 46,300 Fabryka Biznesu 2015 PH Bielany Galeria Metropolia Wrocław 35,000 Inter Ikea 2015 Gdańsk 34,500 PB Górski 2016 VIVO! Stalowa Wola 32,500 Immofinanz /Acteeum 2015 Figure 10 Prime rents in shopping centres (EUR/sq m/ month) Vacancy and rents Vacancy The average vacancy rate in shopping centres in the eight major agglomerations remains at a healthy level below, with the lowest percentages of vacant space recorded in Warsaw and Szczecin. Among the secondary cities with a population between 200 and 400 thousand the average vacancy level has exceeded. Alarmingly, occupancy levels in Radom, Częstochowa and Bydgoszcz have slipped below the healthy level of 95%. Visibly, older generation retail schemes, strongly dominated by large hypermarkets, suffer substantially from growing vacancies and dwindling interest from retailers. Most of the recently completed shopping centres and retail parks were leased at 9 and higher upon opening, which confirms investors more cautious approach to new projects being carefully planned and tailored to the local market requirements. Rents Similarly to 2014, in H prime shopping centre rents remain stable and range between EUR 90 to EUR 100 per sq m per month for top retail assets in Warsaw and range between EUR 43 and EUR 55 per sq m per month in other major agglomerations (fig.10). Downward pressure on rents is visible in secondary and tertiary retail schemes both in larger and smaller cities. Particularly, new completions and rising density statistics have been affecting rental levels in older generation retail properties. Figure 11 Vacancy levels in shopping centres as at end of H % 5% 3% 1% Source: Retail Research Forum Property Times 5

6 Definitions Modern retail stock Prime rent Shopping centre Stand alone retail warehouse Retail park Factory Outlet retail schemes exceeding 5,000 sq m of GLA delivered or refurbished after 1990 the highest rent paid monthly for the most attractive, approx. 100 sq m unit leased by the fashion operator in the best shopping centres modern retail schemes with over 5,000 sq m of GLA and more than 10 shops in the shopping mall, with central management a large-scale stand-alone retail scheme typical for DIY, furniture, electronic appliances, cash & carry and sport operators a retail scheme with a few dominating, stand-alone, large-space anchor tenants, accompanied by smaller tenants; min. two big-box operators a shopping centre with brand shops offering merchandise at discount price

7 EMEA John Forrester Chief Executive +44 (0) Head of Central & Eastern Europe Alan Colquhoun Senior Consulting and Research Kamila Wykrota Capital Markets... Craig Maguire Senior Office Agency... Barbara Przesmycka Retail Agency... Renata Kusznierska Senior Industrial and Logistics Agency Marc Le Bozec Corporate Real Estate Services (CREM) Ian Scattergood Senior Property Management... Christopher Rasiewicz Project and Building Consultancy Andrew Frizell Valuation Urszula Sobczyk Disclaimer This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ. DTZ August 2015 To see a full list of all our publications please go to Global Headquarters 77 West Wacker Drive 18th Floor Chicago, IL USA phone fax info@dtz.com DTZ Poland Ul. Złota 59 8th Floor Warsaw, phone fax info@dtz.pl