Retail centre construction never been so high
CBRE, sale the world?s largest commercial real estate services company reports that an unprecedented 32 million square metres (sq m) of shopping centre space is currently under construction across the world, sales representing a 15% increase year-on-year (28 million sq m in 2012). Shopping centre development activity is heavily concentrated in emerging markets, with China home to more than half of all the space under construction (16.8 million sq m). Seven of the 10 most active cities globally in terms of retail space development are also in China. Other markets experiencing substantial expansion include Istanbul, Moscow, St Petersburg, Abu Dhabi, New Delhi, Kiev, Hanoi and Kuala Lumpur.
Across Europe, shopping centre development in 2012 increased by 10% year-on-year to 1.71 million sq m; however, a large proportion of that (72%) was in Eastern Europe. Istanbul was the most active European development market last year with the opening of seven new centres. Europe?s other highly active market is Russia which, like Turkey, is benefiting from strong economic growth and rising incomes. Moscow has the largest development pipeline, with 815,000 sq m due to open over the next two to three years. In neighbouring Ukraine, Kiev has 445,000 sq m under construction in eight centres, making it the fourth most active city in Europe in terms of retail space development.
In Poland, with shopping centre stock totaling 9.48 million sq m in 416 schemes at the end of Q1 2013, there is currently over 900,000 sq m of shopping centre space under construction. This includes typical shopping centres as well as specialised shopping formats: retail parks and factory outlets. With 240 sq m of GLA per 1,000 residents and gradually improving high streets, the modern retail network in Poland has become increasingly mature while still offering further, albeit increasingly selective, development potential. The largest projects under construction are Neinver?s Galeria Katowicka and the Wzgórze extension in Gdynia developed by Fonci?re Euris, as well as Auchan?s new retail gallery extension in Łomianki near Warsaw.
Magdalena Frątczak (above), Director of Retail at CBRE in Poland:
?Economic drivers for further retail market development in Poland are easing. Consumer demand, so resilient in comparison to other European economies during the first slowdown between 2009 and 2011, is now decelerating. With tenant?s demand clearly easing, and overall vacancy rates on the increase, the Polish shopping centre market is entering the challenging times of a tenants? market, when landlords will be forced to campaign actively in order to attract new retailers. The market is increasingly discriminating between prime and non-prime schemes as the flight to safety for both retailers and investors continues and a number of less successful schemes are suffering.?
The main directions that the market is taking in Poland?s leading cities include the development of specialised schemes: factory outlets and retail parks, development of neighbourhood shopping centres, as well as high street redevelopment. According to experts from CBRE, the coming years will see increased presence of multifunctional centres with strong entertainment element ? such as Galeria Rzeszów opened in November 2012, as well as redevelopment of historical and post- industrial sites into modern schemes, like Outlet Park Szczecin in a former warehouse hall.
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