Retail landscape of Warsaw city centre MAIN HIGH STREETS Introduction 3 High Streets in Warsaw – an analysis of the retail offer 4 OFFER BY DISTRICTS 4 OFFER BY MAIN FUNCTION OF THE BUILDING 4 OFFER BY SECTORS 4 OFFER BY TENANT TYPE 5 VACANT SPACE 5 High Streets in Warsaw – an analysis of the potential 7 FASHION 7 FMCG 8 GASTRONOMY & LEISURE 8 Conclusions and forecast 10 VARIOUS PROSPECTS… 10 CURRENT SHAPE FAR AWAY FROM EXPECTATIONS… 10 THE POTENTIAL DEPENDS ON THE SECTOR… 10 PRO-ACTIVE POLICY IS A CHANCE FOR A DEVELOPMENT… 11 Streets with good vibe 13 Introduction Warsaw is the largest and the most competitive retail shoes and fashion accessories. Based on this, the market in Poland. It consists of: shopping centres, available retail-service-gastronomy offer in the analysed hypermarkets/supermarkets, street markets, market districts was evaluated. Furthermore, conclusions and halls, suburban retail parks and outlet centers, forecasts in terms of further retail development in the department stores and shops on the ground floors city centre were made in the context of existing and of residential and office buildings. future competitors in other sectors. Sectors with growth The renaissance of high street retail expected by city potential were highlighted, as well as those that will government, investors, developers, tenants and residents face difficulties if they are present on high streets in the was a good reason for Colliers International to carry centre of Warsaw. out a detailed research and analysis of this market The chapter ‘Streets with good vibe’ is a supplement to sector. The analysis included a review of the competitive this report and it showcases seven selected streets that position of the sector in comparison to other retail are neither main communication arteries nor main retail distribution channels. We decided to make an attempt locations in the city centre, but they are streets with their to assess what chances this renaissance has and what own atmosphere, places where people spend their free pace it may take. This report was conducted within the time and where you can implement innovative concepts cooperation with GfK Polonia, which helped us with and alternative ways of doing business. its know-how in the field of consumer habits and the The authors are aware of the complexity of the structure of spending of Warsaw residents. development of retail streets. The aspects described The research was conducted in H1 2015 and covered in the report do not exhaust all the problems that seven central Warsaw districts: Śródmieście, Mokotów, enterprises planning to expand in this segment face. Ochota, Wola, Żoliborz, Praga Północ and Praga Legal, planning, communication and social aspects have Południe. Within this area the most attractive retail a great impact on the pace of high-street development. areas1 were identified and all tenants were recorded and When it comes to Warsaw, “the Bierut decree”2 is also classified by their business profile. The buildings were important and the consequent problem of claims from also classified by units and in terms of their function former owners. Nevertheless, in our report we focused (residential, office, commercial, other) and the basic mainly on the competitive aspect of high streets in the attributes of their attractiveness. Existing vacancies and context of changing consumer habits in Warsaw. Enjoy projects under construction were also recorded. the read! The next step was a description of consumers’ habits in Warsaw prepared by GfK Polonia focusing on fashion, Przemysław Dwojak Dominika Jędrak DIRECTOR | CUSTOMER ANALYTICS & SALES DIRECTOR | RESEARCH AND CONSULTANCY STRATEGIES DEPARTMENT SERVICES [email protected] [email protected] +48 502 196 091 +48 666 819 242 Ewa Wasilewska Katarzyna Michnikowska PROJECT MANAGER | CUSTOMER ANALYTICS SENIOR ANALYST | RESEARCH AND CONSULTANCY & SALES STRATEGIES DEPARTMENT SERVICES [email protected] [email protected] +48 22 43 41 481 +48 607 559 587 1 Unbroken string of shops, services and restaurant points with the intensive pedestrian/car traffic 2 Nationalization law aimed, in theory, to reconstruct capital city after World War II 3 High Streets in Warsaw – an analysis of the retail offer OFFER BY DISTRICTS Within the selected retail zones, new investments that offer commercial premises on the ground floor for lease For the purpose of this report, 27 retail zones were are the exception. The limited amount of retail space identified, where approximately 2,860 shops and service/ under construction or being modernised is one of the gastronomy units are located. The vast majority of factors limiting high-street development in Warsaw. retail zones (20) and units (1,880) are located in the Some of the largest projects that will bring new retail/ Śródmieście district. service/gastronomy space in the centre of Warsaw The greatest number of units, within the analysed area, are: the rebuilding and modernisation of DT Smyk on is located on Marszałkowska, Grójecka and Jerozolimskie Jerozolimskie Avenues, the Ethos office building on Avenues. Worthy of mention is the increase in the Trzech Krzyży Square and Hala Koszyki on Koszykowa attractiveness of retail zones and their units in the Praga Street, as well as the revitalisation of Art Norblin on Północ district (10% share in the research), which is Żelazna Street and Koneser on Ząbkowska Street. caused by better accessibility because of the second line Moreover, office projects with a retail segment can be of the Warsaw Metro underground system. A similar added (for example Sienna Towers on Towarowa Street, phenomenon can be expected in the near future in Wola. Centrum Marszałkowska and Astoria on Przeskok Street). Due to the existing urban structure of the district, Type of buildings with premises located on it is difficult to identify attractive retail zones in Żoliborz. the analysed high streets in 7 Warsaw districts Therefore, the share of units in Żoliborz is small in the study. type of buildings 100% No. of premises on the analysed high streets 90% 79% 80% in 7 Warsaw districts 70% No. of premises on the analysed high streets in 7 Warsaw districts 60% 2,000 1880 50% percentage 1,800 40% 30% 1,600 20% 10% 8% 10% 3% 1,400 0% residential office other retail 1,200 Source: Colliers International, November 2015 1,000 lokale 800 OFFER BY SECTORS 600 The space available in the retail zones under analysis is 400 270 240 highly differentiated. The largest tenant group (23%) are 190 200 155 90 cafes, restaurants and bars. Services account for 16% 35 0 Śródmieście Praga Pn Ochota Wola Mokotów Praga Płd Żoliborz of the total (by number of units). The grocery sector is also well represented (10%), as well as fashion (9%) Source: Colliers International, November 2015 and finance (8%). Unfortunately, sports equipment and OFFER BY MAIN FUNCTION OF children & maternity shops have almost disappeared THE BUILDING from high streets in the city centre. Despite the wide variety of available space, some of the The premises under analysis are located on the ground streets under analysis can be said to have specialised floor of buildings of various use. Residential buildings sectors. The most important one is gastronomy; within prevail (79%), including old townhouses of a low the considered streets, the most ‘gastronomic’ one is technical standard. The vast majority of premises (89%) Szpitalna Street, where restaurants, bars and cafes have shop fronts and entrances directly from the street, account for 71% by the number of units. The grocery which is the main advantage in terms of retail and sector is quite visible on many high streets in the city an additional value for services/gastronomy. centre. Ząbkowska, Targowa and Grójecka Streets are 4 good examples. The street with the strongest fashion OFFER BY TENANT TYPE offer is Mokotowska, where fashion stores account for 29% of units. Chmielna is the leader in terms of The available space on the streets under analysis is traditional shoe shops, which make up 13% of all retail dominated by non-chain operators, which constitute units. Contrary to popular belief, the financial sector has 76% of all tenants. This is quite common in shoes not dominated central districts, even on Wilsona Square and leather accessories as well as the fashion sector, (this place is often given as a negative example). Banks which even though it is well represented, does not and other financial institutions account only for 21% of compete with retail chains in shopping centres. Chains the total number of units there. are well represented in the financial sector (90%) and groceries (40%). The data analysis confirms the dynamic Tenants’ business sector structure on the development of some sectors on high streets observed in analysed high streets in 7 Warsaw districts. the last few years. The sectors growing most rapidly are health & beauty, restaurants and accessories & jewellery which represented 34%, 22% and 21% respectively. VACANT SPACE There are 238 vacant units on the high streets under analysis, most of which are in Praga Północ and Śródmieście, where vacant units account for 9.6% and 9.1% of total stock respectively. On the one hand, the vacancy rate on high streets in the city centre is derived from the quantity and quality of stock, while on the other hand from owners’ development policies. Vacancy rate on the analysed high streets in 7 Warsaw districts. Vacancy Rate 12% 10% 9.6% 9.1% 8% 7.2% 6.3% 6% 5.7% LEGEND (SECTOR STRUCTURE IN %) 5.2%