Warsaw Retail: Mind the Gap • May 2009 1
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Warsaw Retail: Mind the Gap • May 2009 1 Warsaw Retail: Mind the Gap! May 2009 2 Warsaw Retail: Mind the Gap • May 2009 Warsaw Retail: Mind the Gap • May 2009 3 New retail development? Sounds unrealistic given the current economic circumstances. However, we should start planning it now so that the leasing and completion stages coincide with the economic recovery over 2011-2013. Introduction this situation is, however, not due to market saturation. The retail This innovative report has been created as a joint initiative of three density in Warsaw is still relatively low (496 m2 / 1,000 inhabitants) high-profile consultants in the real estate field: Jones Lang LaSalle - in comparison with other major Polish agglomerations. It must be leader on the commercial real estate market, GfK Polonia research remembered that the density is based upon the official population institute and REAS residential advisors. As a result, three different figures and would be significantly lower if unofficial population size is aspects affecting the retail development opportunities have been used in the calculations. However, differences still exist between the confronted. These are: districts of Warsaw as pictured on the graph below. 2 • retail density across 92 urban areas of Warsaw; Retail provision density (m / 1,000 inhabitants) – districts of Warsaw • future development of the residential market in Warsaw; Rembertów • purchasing power broken down to the urban areas. Wilanów oliborz The aim of this report was to identify Warsaw sub-regions with Wawer greatest potential for new sustainable retail centre. For this reason Wesoła the report is principally aimed at retail developers, investors and Bielany financing institutions. Praga Pd. First dimension – retail market situation Białołka The retail market in Warsaw has undergone a transformation, Mokotów particularly over the last decade. First and second generation Praga Pn. shopping centres, located in densely populated residential areas, Ursynów mainly in the outskirts of the city, comprised of a hypermarket Bemowo anchor e.g. Centrum Handlowe Targówek, Centrum Handlowe Wola Reduta, Centrum Janki, Centrum Ursynów, Auchan. Exceptions Ursus include Promenada and Blue City which are supermarket-anchored. Ochota Third generation retail centres such as Galeria Mokotów (2000- ródmiecie Targówek 2002), Arkadia (2004) and Złote Tarasy (2007) included a leisure Włochy element from the beginning of their operations. 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 The retail market situation in Warsaw is very unique. From mid- Source: Jones Lang LaSalle, GUS 1990s to 2007, there have always been construction works on new Retail provision data as of April 2009, population data as of July 2008. 2 large-scale retail centres in Warsaw. The last proper shopping and Retail schemes of all types sized 500 m of GLA and above have been taken into account leisure centre was, however, Złote Tarasy opened in 2007, whilst overall the most recent addition to retail stock in Warsaw was It is worth pointing out that the significant retail clusters in Janki, Galeria Rembieliska in autumn 2008 as part of a residential block. Marki and Piaseczno have been included in the density of Włochy, At present, retail construction activity in Warsaw is extremely limited Targówek and Ursynów respectively, influencing the final ranking. (gallery adjacent to E.Leclerc in Ursynów, department store by Wolf The reason behind this concept is that, despite out-of-town location, on ul. Bracka and Metropol Dom i Wntrze). The reason underlying these clusters have a significant impact upon the retail potential in the adjacent districts and as such cannot be ignored. 4 Warsaw Retail: Mind the Gap • May 2009 Therefore, Włochy is a frontrunner in respect of the retail density in Warsaw, due to the inclusion of the Centrum Okcie (Real, Media Markt, Meble Agata, Praktiker), and the huge retail cluster in Janki with Centrum Janki (Real, Leroy Merlin, Saturn, Cinema City) and Park Handlowy Janki (Ikea, Praktiker, Electro World). Targówek, ranked second, includes the cluster of retail development in Marki i.e. M1 centre with Real and Praktiker; Centrum Handlowe Targówek; Zielony Park Handlowy; Park Handlowy Targówek with Ikea, Domoteka, Leroy Merlin, Electro World, Decathlon and others. Interestingly, Ursynów ranks relatively low (in the middle of the ranking) despite the inclusion of Auchan and Fashion House in Piaseczno. Second dimension - spending power in Warsaw An important measure of affluence in a given area is the overall purchasing power. It is defined as the total value of goods and services that the population in a given area can afford to buy over a year. Unsurprisingly Warsaw residents have higher purchasing power in comparison to the entire country. On the average, they can nominally purchase almost 64% more goods and services than an average inhabitant of Poland, the best score amongst all 2,478 municipalities in Poland. However, the discrepancies in spending power between the districts are in some cases 100%. An in-depth analysis demonstrates that the majority of affluent population is concentrated in the south-western and northern parts of Warsaw. Ursynów, Wilanów Czerniaków, Natolin, era Zachodni, Tarchomin, Pyry and Powsin are frontrunners in this respect. These areas feature the highest overall purchasing power per capita. From the point of view of a retail developer, the attractiveness of a given area is determined not only by high purchasing power per capita but also the overall volume of cash concentrated in that area. A simple rule applies here - the more people live in the area, the larger pool of money. Thus most desired retail locations should feature a combination of a large pool of money with a high purchasing power per capita. Having regard to the two parameters as above, Ursynów and Natolin are ranked high in Warsaw as the two areas are characterized by top rankings of both parameters. The leader group also encompasses Tarchomin, Słuew, Czerniaków, Wierzbno, Sielce, Mokotów Stary, Szosa Krakowska, Górce, Bemowo Zachód – all these areas have a high purchasing power, coupled with a relatively large pool of money. In addition, taking one of the two aspects into account, the following areas should also be regarded attractive for retail development: Bródno (large pool of money) and Wilanów, Powsin, era Zachodni and Pyry (top purchasing power per capita). In conclusion, the capital city is diverse with regards to purchasing power of Warsaw residents. This should be taken into account when looking for sites for new retail projects. Warsaw Retail: Mind the Gap • May 2009 5 Purchasing Power Broken Down to Warsaw’s Districts Source: GfK Polonia 6 Warsaw Retail: Mind the Gap • May 2009 Third dimension - future residential development in Warsaw A key part of a retail analysis is the site catchment area. While By far the largest concentration of residential developments to be status quo analyses are quite easily feasible based on available completed during the next 24 months can be found in the demographic data, prognoses are not. In order to estimate the future Miasteczko Wilanów development area in the northern part of the population living in a defined catchment area, it is critical to monitor Wilanów district. Another important region with high building the development of the residential market on a regular basis. This intensities is the Białołka district, particularly the three applies both for the secondary market and the primary market. In neighbourhoods of Maki-Brzeziny, Nowodwory and Tarchomin. case of the former, transformations in the population pattern of a Furthermore, there are several smaller neighbourhoods of quite high functioning neighbourhood are mainly due to gradual changes in construction and pipeline activity, such as Bemowo’s Górce area or household structures. Current trend in this respect is a development the downtown neighbourhood of Centrum-Północ. These areas look towards less dense living, with the number of persons within a set to change not only the physical/ architectural appearance but household gradually declining. Thus, changes in the secondary also the resident profile, both in quantitative and qualitative terms. market typically point towards a decrease in residents lining in the existing housing stock. On the contrary, Warsaw’s primary market is In addition to short-term outlook based on developers’ plans, REAS quickly developing and adds a large portion of new dwellers to forecast residential growth in Warsaw’s 92 urban planning areas by certain neighbourhoods. The increase in population is derived from 2020. This long-term forecast is chiefly built upon residential both migrants and the inner-city redistribution of Warsaw residents. development opportunities according to official spatial planning In any case, new residential development plans are a barometer of documents from the Warsaw Municipality. Furthermore, it also takes future growth areas in terms of population. into account development trends as well as developers’ announcements of projects for completion after 2010. Again, REAS According to REAS monitoring of developers’ plans, there are more estimates show the highest long-term development potential in the than 38,600 apartments planned to be completed in over 300 urban areas of Wilanów-Czerniaków and Maki-Brzeziny followed residential developments over 2009-2010. A large part of these by two other Białołka areas (Nowodwory and Tarchomin) as well projects is at advanced building stage,