Retail parks are weaving a dense web in Poland and giving investors a run for their money
Retail parks are giving investors a run for their money. Numerous convenience retail facilities are being completed in increasingly smaller towns and cities across Poland.
"Retail parks are seen as an attractive investment product. In the third quarter of this year alone, construction of projects with a total area of about 80,000 sqm were initiated in this format. The segment is recording another year of rapid growth, despite increasingly difficult economic conditions, reports Agata Karolina Lasota, managing director of LBC Invest. - The construction of retail parks with an area that usually does not exceed 10 thousand square meters is usually decided by investors who have their own capital. They are not discouraged by market impediments, nor by the high and ever-increasing costs of building and operating real estate. They bet on retail parks and convenience centers, because these are the properties today that guarantee the most satisfactory rates of return," explains Agata Karolina Lasota.
In the third quarter of this year alone, nearly 120,000 sqm of retail space was completed, including several retail parks. Convenience projects are being developed in smaller and smaller towns. Now even ones with a population of several thousand, where the market is not yet saturated with retail space.
"Retail parks are sought-after investment assets, but their availability is still limited. In total, they cover only a dozen or so percent of the more than 15.7 million sqm of the total stock of the retail real estate sector in Poland. However, there is considerable investor activity and an increase in new supply in this segment," admits Agata Karolina Lasota.
Looking for economical solutions.
The high cost of real estate maintenance is causing both investors and tenants to opt for more economical facilities. - Rents and maintenance fees in retail parks are much lower than in large shopping centers with extensive common areas. They are eagerly chosen by tenants looking for savings. We can observe in the market the expansion of popular grocery operators and chain industrial discounters, locating more stores in convenience centers," notes Agata Karolina Lasota. - The high interest in retail parks means that the completed facilities are fully commercialized, and some have a set of tenants already at the beginning of construction, she adds.
During the nine months of this year, more than 300,000 sqm of retail space was delivered across the country. Most were delivered by new retail parks and convenience centers. Construction of more such facilities is scattered all over Poland, and the start of more has been announced. Some investors who have been active in this segment for years are thinking of implementing a series of new projects.
Retail parks under construction.
Two new retail parks under the common name Atut Galicyjska with an area of more than 20,000 sqm are to open in Krakow. In Grodzisk Mazowiecki, construction has begun on an 11 thousand sqm Sfera Park retail complex. In Radom, a new retail park is being developed by RockCapital.
Work is also underway on the construction of the Glinianka retail park with an area of 10 thousand sqm in the village of Łubna, near Gora Kalwaria, near Warsaw. The opening of the Ilawa Era retail park with an area of over 7 thousand sqm is scheduled for March 2023. In Toruń, an expansion of the Nowe Bielawy shopping center is underway, upon completion of which two new parks will be built, one of which has already entered the market.
In Pobiedziska (6,000 sqm), Zlocieniec (10,000 sqm) and Chelmza (10,000 sqm) new retail projects are to be built by PKB Inwest Budowa, which is also developing parks in Wroclaw and Pyrzyce.
In Opole, there will be a new Ozimska Park (18 thousand sqm), which will be built on the basis of the former Ozimska Gallery, where the largest tenant used to be a Tesco hypermarket. Multishop Sochaczew, located at the exit of national road 92, is also being expanded, which will provide more than 12 thousand sqm of new space once work is completed on, among other things, the redevelopment of the former Tesco.
Preparing for construction is a Smart Park in Wąbrzeźno with an area of about 10 thousand sqm GLA. New retail parks under the Premium Park brand will also be built in Konin, Stojadły, Opoczno and Białogard, among others.
New retail parks.
A 30 sqm Karuzela shopping center has opened in Kolobrzeg. A new 8,000-square-meter facility under this banner has also been launched in Wągrowiec, Wielkopolskie Voivodeship. Karuzela retail parks will also have Biała Podlaska and Jastrzębie Zdrój.
In Grodzisk Mazowiecki, the Retalia retail park opened in August this year. In Skarżysko-Kamienna, Świętokrzyskie Voivodeship, the 31st Vendo Park in Poland, with an area of 8,000 sqm, was recently opened, and a little earlier a similar facility in Otwock, with an area of 9,000 sqm, was completed. In Zielona Góra, the country's 11th convenience retail park under the Stop Shop brand was built, with an area of 6.7 thousand sqm.
In Legionowo, the Maxim Center was opened, the largest retail facility in the city with an area of 10 thousand sq. m. GLA. Zamość's Galeria Twierdza has been expanded with a 4.2 thousand sqm retail park.
In Gniezno, N-Park, which is the brand's second facility in the city, was opened at Składowa Street. It complements the offer of Galeria Piastova, which has been operating for several years. Together they offer more than 16 thousand sqm GLA. Another N-Park is expected to be completed next year in Piotrkow Trybunalski.
Planned mixed-use facilities.
The retail park market still has great potential for growth, admits Agata Karolina Lasota. - Investors are constantly looking for land for new investments. Land prices have stabilized, but rates are high in the most interesting locations. In the central zones of the largest cities, land for retail and service properties is offered at prices exceeding 300 euros per sqm GLA, and in the center of Warsaw plots are priced even at about 1,100 euros/sqm GLA. In smaller cities, where most retail parks are now being built, the offer rates are several times lower, he reports.
The second type of facilities that are bringing a significant amount of new retail space to the market are mixed-use projects. Investors are looking for the most optimal use of space, located in the central areas of the largest cities, where land for investment is scarce. Hence there are many multi-functional city-forming complexes being announced and prepared for construction, based on the revitalization of factory buildings.
In this respect, Warsaw is in the leading position. Liebrecht & wooD recently announced that it is starting preparatory work for a project to revitalize the former Warsaw Wire, Stick and Nail Factory - Drucianka located in Praga-Północ. The Drucianka Campus complex is expected to provide about 42,000 sqm of offices and 7,500 sqm of retail and service space.
In Praga, on the site of the former Pollena Beauty factory, the Bohema Strefa Praga mixed-use project is also being developed by OKAM. The investor is also planning to revitalize 62 hectares of the former FSO area in Warsaw's Żerań, where a grand mixed-use complex is also to be built.
Echo Investment also intends to develop an urban mixed-use project on the site of the current Jupiter shopping center on Towarowa Street in Warsaw.