Retail - Outsourcing Portal

1 Market Insights | Q1 2017 | Poland | Colliers International

Retail General overview

> In first three months of 2017 approximately 10,000 m2 were delivered to the market in Poland. At the end of March, total retail modern stocki

1 amounted to about 11.2 million m2.

Evolution of retail stock in Poland 2000-2017 Q1

Source: Colliers International

> At the end of Q1, approximately 550,000 m2 of shopping centre space with completion dates by 2018 remained under construction.

> In the market, we still observe the processes of repositioning the older retail schemes by their modernization, extension and renovation. Stores are also modernized by their tenants.

> In the period from January to March this year, beyond the pre-lease agreements in projects which are currently under construcion, the transactions in existing shopping centres were noted especially in such sectors as groceries, fashion, also sport and recreation.

> The average vacancy rate for the 18 largest Polish cities remains at a low level of about 3.5%.

i Shopping centre – well-designed, built and managed retail project with above 5,000 m2 of gross leasable area (GLA) and above 10 retail units

The lowest vacancies are recorded in Warsaw, while the highest are in Radom.

Supply

> In Q1 2017, new parts of two extended shopping centres were completed – Auchan Hetmańska in Białystok and Outlet Park Szczecin. Since January of 2017, Galeria Graffica (currently Outlet Graffica) has changed its retail offer: as a result of conducted recommercialization the project will turn into the first outlet centre in the region.

> It is worth mentioning that the new specialized centre in Gdańsk was opened – Galeria City Meble (in the place of former Top Shopping) offering aproximately 70 furniture stores, as well as space for architects and designers.

> In the last quarter, modernizations and renovations commenced on several shopping centres, including Forum Gliwice, EMKA Koszalin and Arkady Wrocławskie. An interesting change will also take place in Wola Park, where a renovation and conversion of Ulrychów historic greenhouses for social, educational, entertainment and gastronomic functions was announced.

Demand > In Q1 2017, several retail chains debuted in Poland,

including Trespass (the first regular store in Blue City in Warsaw) and Freya (in Poznań‘s Stary Browar). However, brands such as Kipling and Stenders decided to withdraw their stores from the Polish market.

> Transactions which are worth mentioning among lease agreements announced at the beginning of the year: P&C (4,000 m2) in Wroclavia shopping centre, Van Graaf (3,250 m2) in Forum Gdańsk, Zara (3,500 m2) in Kraków’s Serenada, Intermarche (2,610 m2) in Galeria Młociny in Warsaw, TK Maxx (2,400 m2) in Atrium Biała in Białystok and Carrefour (2,200 m2) in Galeria Olimp in Lublin.

> Brands from the sports sector (for example Martes Sport in Stary Browar in Poznań and Galeria Dominikańska in Wrocław) and recreation sector (for example Jump Arena in Wodny Park Handlowy Marywilska in Warsaw,

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Annual Supply (m2) Stock (mln m2)

Retail market | Poland

Market Insights Q1 2017

2 Market Insights | Q1 2017 | Poland | Colliers International

Masters Bowling&Billard in Tarasy Zamkowe in Lublin) have been developing.

> Retail chains implement and develop multi channel strategies of sale in the Polish market – for example since February this year, IKEA has offered internet sale of furniture for clients in Warsaw, Gdańsk, Wrocław, Katowice, Kraków, Poznań, Bydgoszcz and Łódź.

> Polish retail chains are still an attractive investment product. The sales agreement of Żabka Polska between Mid Europa Partners and CVC Capital Partners was signed in Q1 of this year (aproximately 4,500 grocery stores in Poland).

Selected lease transactions announced in Q1 2017 Tenant Sector Area (m²) Location

P&C fashion 4,000 Wroclavia

Van Graaf fashion 3,250 Serenada

Zara fashion 3,500 Vivo! Krosno

Intermarche supermarket 2,610 Galeria Młociny

TK Maxx fashion 2,400 Atrium Biała Masters

Bowling&Bilard bowling alley 2,200 Tarasy Zamkowe

Carrefour supermarket 2,200 Galeria Olimp

CityFit fitness 2,050 AKS Chorzów

TK Maxx fashion 1,800 Kaskada

CCC shoes 1,420 Galeria Młociny

New Yorker fashion 1,220 Galeria Północna

Martes Sport Sport 1,100 Stary Browar

Source: Colliers International

Vacancy rate

> The average vacancy rate in shopping centres noted for eighteen largest cities in Poland at the end of December 2016 stood at 3.5%.

> Warsaw has the lowest vacancy rate (1.9%) among the main major retail markets,. However, the largest availability of retail space is noted in Poznań (5.1%).

> Among large cities (150,000-400,000 inhabitants), Radom (7.2%) and Bydgoszcz (6.7%) have the highest levels of vacancy space in Polish shopping centres, while the lowest are noted in Bielsko-Biała (2.0%) and Rzeszów (2.1%).

> The closing of Alma supermarkets and Praktiker DIY stores caused a temporary vacancy increase in several shopping centres in Q4 2016/Q1 2017. However, that space is quickly absorbed by other supermarket (Carrefour, Intermarche, Piotr i Paweł) and DIY chains (Leroy Merlin).

The vacancy rate in shopping centres

Source: Colliers International based on PRRF

Prognosis

> At the end of Q1 2017, over 550,000 m2 of new retail space were under construction, 55% of which is planned to be delivered to the market between April and December this year.

> The largest retail projects that are currently under construction are: Galeria Młociny (70,000 m2), Wroclavia (64,000 m2), Galeria Północna in Warsaw (64,000 m2) and Forum Gdańsk (62,000 m2).

> The most interesting projects planned to be delivered to the market by 2018-2019 include IKEA Zabrze (65,000 m2), Nowa Stacja Pruszków (27,000 m2), Silesia Outlet (20,000 m2) and extensions of Janki Shopping Centre (20,000 m2) and Fort Wola (IKEA store).

> A few retail chain debuts in the Polish market are announced for 2017, of which Iconix Brand Group is worth mentioning.

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Vacancy Rate (December 2016)

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Colliers International has been active in the Polish market since 1997 and operates through offices in Warsaw, Kraków, Wrocław, Poznań, Gdańsk Katowice and Łódź with over 250 employees in total. The company has been often honored for its achievements by industry organizations such as Eurobuild, CIJ Journal, CEE Quality Awards and the International Property Awards. Colliers’ most recent distinction in Poland include the “Outsourcing Star”, given in recognition of its status as one of the most active real estate advisors in the outsourcing sector; and the “Gazele Biznesu” for being one of the most dynamically developing companies in Poland.

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