Retail Guide 2022

Table of Contents

Editorial

Regional Quotes

Regional Investment

Markets are facing some challenges but optimism abounds

Regional Development Retail markets go through fundamental changes

Regional Feature Nominations open for the 15th annual CEE Retail Awards and Marketplace

Poland Overview Poland’s retail markets prove relatively robust during the crisis

Hungary Overview Refurbishment and mixed-use schemes dominate retail development

Czech Rep & Slovakia Overview

Czech and Slovak retail seen as stable

Romania Overview Strong retail pipeline in Romania

Serbia Overview Development pipeline dominated by retail parks

Feature

Top Real Estate firms celebrated at the 12th annual CEE Investment Awards

*front page picture credit: ULI & PwC: Emerging Trends in Real Estate® Europe 2023

Czech developer Crestyl is developing the Dornych shopping and mixed-use centre in Brno. The new mul tifunctional complex is expected to take four years to complete. Investment costs are estimated at €284 mil lion

The region is continuing to attract a growing number of international developers and investors as well-conceived projects offer a yield premium on the more established CEE and Western European markets for investors, albeit with more expensive financing and a low supply of avail able investment grade assets.

Retail markets go through fundamental changes

The retail markets in the CEE region have undergone fundamental changes with regard to development strategies, centre management and leasing as a result of the pandemic and the subsequent lockdowns. Nowadays, longerterm concerns over spending power amid the economic crisis, a more sophisticated shopping and leisure experience demanded by consumers and questions over the availability of debt finance on favourable terms are just some of the challenges facing the sector.

The retail sector across Poland has been affected in varying degrees by the challenging trading environment caused by price increases that are being driven by shortages of raw materials and higher energy costs which are being amplified by the continuing conflict in Ukraine. However, the impacts on consumer confidence and retail activity are mixed.

The latest major edition to the Budapest shopping centre market is the 55,000 sqm Etele Plaza by the prolific Hungarian developer, Futureal, which has just celebrated its first anniversary. Prior to the opening there had not been a delivery to the capital’s shopping centre market in several years. No further shopping centres are planned and the major forms of retail development are as part of mixed-use projects and smaller regional retail centres.

Poland’s retail markets prove relatively robust during the crisis

Markets are facing some challenges but optimism abounds

Editorial

Gary J. Morrell

The retail markets in the CEE region along with the hotel and hospitality sectors are facing several challenges. Not only were they the sectors most negatively im pacted by the pandemic but today they are heavily affected by the current econom ic downturn caused by wider geopolitical influences. Further, retail currently stands behind the office and industrial sectors regarding the preferences of developers and investors.

The retail offer in the region’s capitals is seen as consolidated in relation to per ceived demand and there have been few significant additions. However, as the market matures many earlier generation centres are seen as outdated and unable to meet current modern consumer needs. Therefore, centre owners are planning extensive renovations, redevelopments and extensions of their assets to meet the changing role of brick & mortar retail and the need to compete with more recent additions to the market.

Although consumers in CEE tend to prefer the physical experience of a shopping centre more than, for example, in Western Europe, landlords still need to adapt to the increasing rise of e-commerce by providing showrooms for products with the option of purchasing online or in the shop.

At the same time, with a view to competition from e-commerce, centre owners need to provide an enhanced interior environment with competitive retail offers, entertainment and F&B offerings that enhance the experience of visiting a retail centre and make it a pleasurable experience that encourages the consumer to make regular return visits.

Although consumers in the capitals are well catered for with relatively easy access to shopping centres in most areas of the cities, most planned new developments are through the development of smaller formats such as retail parks in the outskirts of the capitals and regional cities and towns in areas with no provision of retail and entertainment within a reasonable travelling distance.

Retail parks and stand-alone box retail require a relatively low initial capital outlay and the development process is relatively short compared to expensive large-scale shopping centres where the planning and development can be protracted. Further, smaller formats can be extended or renovated in a relatively short period and there is the critical mass, which is lacking in built-up urban environments.

The retail sector currently stands behind the office and industrial sectors regard ing the preference of investors with concerns over the retail sector due to the in creasing use of e-commerce, spending power and increasing utility prices in larger formats, although the smaller formats are attracting the interest of investors, who have the opportunity to build portfolios.

However, the view is that there will always be demand for physical retail, enter tainment and service outlets and owners will have to ensure that the standard of assets continues to rise to continue to attract customers to attractive and accessible centres.

Central & Eastern Europe Retail Guide

Volume 44, Number 1, November 2022

Publishing House

Kitbridge Media Sp zo.o. Kaleńska 5, 04-367 Warsaw, Poland

Publisher

Craig Smith craig@europaproperty.com +48 577 100 620

Editorial Director Winston Norman winston@europaproperty.com +48 506 535 293

Editor

Gary J. Morrell gary@europaproperty.com +36 703 199 068

Journalists Gary J. Morrell Winston Norman Elie Issa Alex Webber Ewan Jones

Poland Country Manager Sylwia Gajda sales@europaproperty.com +48 501 091 751

Hungary Country Manager Gary J. Morrell gary@europaproperty.com +36 703 199 068

Romania Country Manager craig@europaproperty.com

Administration admin@europaproperty.com

Subscription subscription@europaproperty.com

Art Director Daniel Zbroszczyk graphic@europaproperty.com

Venue Partner

Elmar Schoonbrood Co-CEO, Multi Corporation

Footfall in our shopping centres in Central and Eastern Europe has recovered to prepandemic levels. In addition, sales have been strong and are generally exceeding 2019 levels. Post-Covid, we have observed an increased appetite from customers for a physical shopping experience. Our shopping centres function as meeting places where people gather with friends and family and spend an increasing part of their time as this is an experience they can’t get online. We, at Multi, feel that a tenant mix which includes more food & beverage and services is important towards the overall success of a modern shopping centre. Although online sales in CEE are still relatively low compared to Western Europe, we do expect online sales to increase and are here to stay. Retailers are increasingly utilising omnichannel sales strategies as they recognise the opportunities this brings. Given our broad experience, we are perfectly positioned to support the rapid changes in the retail sector.

Michelle Buxton CEO and Founder, Toolbox Marketing

Customer behaviour is dictating the way we manage and invest in retail real estate assets. Customers want a relationship with their local brand, they want to be part of a community and they demand more from their omnichannel shopping experiences. Sustainability and ED&I will drive top-level brand support, ultimately convenience linked to retail and leisure variety are the important issues when making a purchasing decision. Therefore, delivering and managing a destination requires innovative thinking, the flexibility of structure (lease and space) and ongoing investment into an overarching omnichannel strategy.

Stéphane Keulian Concept & Customer Experience Developer, Ingka Centres

Despite the difficulties we have all faced over the past few years, we are excited by the potential of bringing our meeting places to more locations globally, and closer to the many people. Across our centres, we are seeing rising consumer demand for shopping, leisure, experiences and socialising outside the home - all while being as sustainable as possible. Over the past year, we have introduced a number of new initiatives, including our first circular hub - Circuit - which is a retail space focused on educating and supporting visitors with repairing, reusing, renting and recycling goods. Looking forward, we want to do our part and bring value through our meeting places by having a positive impact on people, communities and our planet. We are perfectly positioned to drive the transition toward a greener future, and our goal is to secure 100 percent renewable electricity in all our buildings worldwide by 2025.

Magdalena Bartkiewicz-Podoba CEO, Liebrecht & wooD

After putting on hold all decisions first due to the pandemic, then due to Russian aggression on Ukraine, the commercial real estate sector is slowly resuming. According to market data, while e-commerce continues to grow dynamically, investor appetite for Poland’s commercial real estate sector remains strong. The long-term perspectives are very positive and once the financial markets have stabilized, we will again observe an increasing interest in Polish projects. Europe is shifting towards investments that fit within the concept of 15-minute cities, the cities that are polycentric, with multiple local centres offering a variety of functions and responding to their citizens’ needs. The numbers show that such multifunctional projects best survived the pandemic and are considered the future of commercial real estate. As an essential element of the urban tissue, commercial buildings (especially those combining offices and retail) should consider their role in the development of the local communities. Liebrecht & wooD’s mission follows that human-centred path: It is not only about construction, operation and financial management but also about placemaking and bringing life to the places that we create.

Pepijn Morshuis CEO, Trei Real Estate

As far as traditional shopping centres go, Poland has essentially caught up with western European markets. Germany’s eastern neighbour now has a density ratio of 258 sqm per 1,000 inhabitants in this segment, compared to 276 sqm in Western Europe. The retail park segment presents an entirely different picture: Here, the density ratio is only 84 sqm per 1,000 inhabitants. The low level of supply implies a significant potential for further growth. It is one of our main reasons for developing so many retail parks there and keeping them in our portfolio. Just like in other markets, the macroeconomic situation in Poland is defined by very high inflation rates and fast-rising interest levels. In September, the inflation exceeded 17 percent. Poland’s central bank quickly raised its key lending rate in the course of the year. The most recent interest rate hike on 7 September brought it up to 6.75 percent. Against this background, the stability of the retail park segment is very reassuring.

Maciej Podwojski Head of Sales, CEE Primark

With the cost-of-living crisis deepening, value is more important now than ever before as consumers have less disposable income and look to make their money go further. Retailers must respond by offering customers great value as well as more reasons to come out and shop in physical stores. We believe passionately that a thriving local shopping area benefits everyone in the community. That’s why we at Primark are continuing to invest in bricks and mortar and our in-store experience. We are creating shopping destinations which offer fashion, beauty, lifestyle, and homeware at the best value prices, all under one roof, as well as services such as beauty salons and cafes, which complement and enhance the customer experience. This not only gives customers more reasons to visit our stores, it drives more footfall into towns and cities where we are located.

29 Nov. - 1 Dec. 2022

Palais des Festivals Cannes, France

The leading international retail property event to build the ultimate lifestyle and

PREMIUM NETWORKING EVENTS PROGRAMME

6 premium networking events to connect and discuss with c-level targeted professionals. All these events are by invitation only.

How to shape retail in cities!

This summit will look at how cities can reinvent themselves to remain attractive for retailers, featuring successful business cases and networking opportunities with experts.

This event will bring together landlords, retailers, international cities, political leaders and investors.

Sustainability workshop

A new format providing participants with accurate information about the key elements that make a project sustainable, featuring successful business cases and networking with experts and specialists.

This event is dedicated to landlords, retailers, investors & cities.

Mapic outlet summit

Our annual focus on the dynamic and expanding designer outlet sector, will bring together outlet developers, retailers & investors.

Legal forum

A new format to support the industry facing current challenges such as innovative use of technology and data, new forms of leasing, licensing and franchising, doing business both through ecommerce platforms and stores.

This forum will bring together lawyers, landlords, retailers & asset managers.

Meet the leisure operators!

An exclusive networking event focusing on new business models and the latest location-based entertainment trends / projects to shape lifestyle destinations.

This event will bring together leisure operators, landlords representatives, cities representatives and retailers.

Multi-unit & Master franchise summit

An exclusive closed-door networking event bringing together international franchise partners and a selection of retail and restaurant leading brands willing to boost their business around the world.

Markets are facing some challenges but optimism abounds

The region is continuing to attract a growing number of international developers and investors as well-conceived projects offer a yield premium on the more established CEE and Western European markets for investors, albeit with more expensive financing and a low supply of available investment-grade assets.

Despite geopolitical events, real estate ex perts expect solid, if not spectacular, invest ment activity for the remainder of the year, as long as the Russia/Ukraine crisis doesn’t have a deeper impact on the European economy.

A growing pool of investors are joining the markets despite the economic uncer tainties, and quite a few notable investors have already entered. This activity is expect ed to continue and maybe see even a few large institutional investors pull the trigger on local assets.

Since the market segments are in different stages of development, there is an obvious

lack of products in the industrial segment, in particular of modern logistics facilities. From a long-term perspective, the office market will continue to be the main focus of the investors primarily due to its healthy funda mentals.

With strong CRE fundamentals, high in vestor demand and continued downward pressure on yields, rising construction costs will delay the development of new supply and products. This could strengthen the ex isting core and core-plus property values in particular and reinforce the seller’s market.

The hostilities in Ukraine are having a strong impact on Central and Southern East

ern Europe’s real estate markets. For exam ple, developers are facing severe disruptions to supplies of building materials and the reduced availability of construction workers. Tenants have already suffered from rising inflation and energy charges, further fuelled by the weakening local currencies relative to the euro, a currency in which rents are de nominated.

However, there is a surge in demand on the residential rental market and more en quiries for office and warehouse space from companies wanting or forced to relocate operations to the region. Cross-border in vestors are likely to remain more cautious,

Retail parks are becoming ever more popular

Winston Norman

leading to a short-term dip in real estate investment volumes, albeit with a potential for a strong rebound if the armed conflict is resolved peacefully.

For perhaps the first time since the Cov id-19 pandemic, prime offices are looking like an increasingly attractive defensive in vestment as they are relatively protected from higher inflation due to the indexation of rents across core European cities.

During the pandemic, convenience retail assets became the “new star” of the sector in terms of investment attractiveness. Due to the lack of larger retail parks in main cities, investors were focusing on smaller projects in secondary locations which resulted in a lower volume and high liquidity.

The fact is that the pandemic only accel erated the trends which had started a few years before. The tendency to shop near the place of residence and the growing pur chasing power of the inhabitants of small er towns popularized everyday trade. This, combined with the fact that the pandemic restrictions did not have such a large impact on smaller retail facilities, did not go unno ticed by investors investing in this market segment.

Investors already existing in this segment have intensified their activities. They are targeting mainly food-anchored properties leased on long-term to financially strong tenants with a good reputation, such as health & beauty or DIY stores.

The main factor affecting the real estate sector and the overall economy is the high inflation rate. An increase in the cost of ma terials and construction may contribute to extending the delivery date of new supply. Can developers quickly find solutions to these situations? The market will continue to be stimulated by the growth of e-commerce tenants and logistics operators.

Sustainability and ESG are at the heart of many debates today. The continuation of eco trends with meeting the assumptions and conditions of ESG (Environmental, So cial and Corporate Governance) and further green certification of buildings will continue to dominate agendas.

Falling in line with new sustainability de mands, trends and regulations, ESG-related aspects are having an increasing impact on decisions made by investors. This is influ enced both by the growing awareness in terms of sustainable development and envi ronmental impact and also by the need to comply with ESG reporting requirements.

More than ever, the consensus across the real estate community is how the industry

can tackle the risks presented by climate change, achieve net zero and net positive developments and ensure that positive so cial outcomes are embedded into real estate decision making.

There is no question that the industry is on the right track in its efforts to achieve ESG-compliant buildings and neighbour hoods. But despite all the joy, it is only an

intermediate step, especially as investors are realising more and more that it is not done with the trade and that its responsibility doesn’t end at the property line.

Put more simply: Those who have started early with the time-consuming collection of data, directly or based on energy perfor mance certificates, can carry out the “rollout” to the portfolio more quickly.

However, many development projects are proceeding in this difficult and challenging period - marked by the effects of the Cov id-19 pandemic and the unpredictable geo political context - but all signs point to the industry’s continued optimistic outlook and confidence about the success of the markets moving forwards.

The e-commerce boom has proved to be sustainable

Retail markets go through fundamental changes

The retail markets in the CEE region have undergone fundamental changes with regard to development strategies, centre management and leasing as a result of the pandemic and the subsequent lockdowns. Nowadays, longer-term concerns over spending power amid the economic crisis, a more sophisticated shopping and leisure experience demanded by consumers and questions over the availability of debt finance on favourable terms are just some of the challenges facing the sector. In general, the different markets are seen as consolidated with a move from the planning and development of large-scale shop ping centre projects to the redevelopment, redesign of tenant mixes and extension of existing projects by centre owners.

A move from large-scale projects in the capitals to smaller outlets such as retail parks in regional cities and smaller population centres that have so far not been served by a modern retail provision is increasingly pop ular throughout the region. Another strate gic change is for the inclusion of substantial retail elements as part of mixed-use com plexes including office, residential, leisure and services with the different elements having a mutually beneficial role according to the development plans.

In further development, both developers and centre owners need to meet sustainabil ity requirements, as has been the case in the office markets for some time. Concerning in vestment, retail tends to stand behind office

and industrial in the view of investors and at the same time owners are tending to hold onto their assets in the current uncertain market environment. Despite the similarities in trends across the region, the different mar kets are at very different stages concerning market development and the size and geo graphic nature of the countries.

The share of online shopping in the total retail turnover in the CEE region in the last five years has grown by 9 percentage points to 15 percent. According to CBRE’s forecasts, in four years it will amount to 20 percent. Al though this varies across the different retail markets in the region, all retail asset owners will need to adapt their products to meet the challenges of the increasing use of e-com

merce and ensure that physical shopping is enhanced as an enjoyable experience. The evidence is that many consumers in the re gion have a preference for bricks and mortar shopping.

“The second major factor is the fact that Romanians seem to be one of the (if not the most) culturally predisposed people in the EU to want to touch and feel a product before they buy it, as per Eurostat surveys. So, there is a cultural aspect at play as well, which can explain why both brick-and-mor tar and e-commerce sales have been grow ing exponentially alongside one another for the past 10 years. We also need to mention that despite e-commerce activity settling at a much higher level than before the pan

Etele Plaza in Budapest by Futureal

Gary J. Morrell

demic, for the dominant shopping centres in large cities, it is almost business as usual with regards to visitors/customer spending,” commented Liana Dimitru, head of retail at Colliers Romania.

There are few large-scale shopping cen tres in the pipelines traced across the region as the capital are regarded as having enough retail offer to meet perceived demand with no space in the market for new and expen sive new development schemes. An excep tion to this is the latest edition to the Bu dapest shopping centre market, the 55,000 sqm Etele Plaza by Futureal, which opened a year ago after several postponements, due to the economic crisis, the pandemic and online penetration of the retail market as well as concerns over market saturation in Budapest. However, analysts see the de livery as a welcome freshening of the Buda pest shopping centre market where many of the centres are earlier generation assets and therefore seen as outdated with regard to design and tenant offering in the changing market environment.

Tibor Tatar, CEO of development at Fu tureal, argues that the letting process was lengthened due to the need to provide a tenant offering that reflects current mar ket needs. The development is BREEAM Very Good certified with certification increasingly becoming the norm for new or newly rede veloped products. The retail concept was designed by Chapman Taylor, the architect was the Hungarian Paulinyi-Reith & Partners and interior design was undertaken by Dyer, all designers incorporated sustainability el ements in the design process according to Futureal. The plaza forms part of a mixeduse development with significant office and service elements on a brownfield site at a transport hub with easy access from res idential areas with 230,000 people within close proximity according to Futureal. Such suitably-sized development plots at trans portation hubs with easy access from res idential areas in Central European capitals have become difficult to source.

Multi Corporation, as specialist shopping centre managers and designers, have com pleted the €18 million refurbishment of the Allee Shopping Center in Budapest by what it describes as enhancing the “interior and exterior design and investment in sustaina bility to pave the way to carbon neutrality.”

The complex has received BREEAM Out standing accreditation following the reno vation. Allee was purchased from ING Real Estate by Allianz Real Estate and an investor

represented by CBRE Investment Manage ment, who started the refurbishment works in 2020.

In the centre of Bratislava Stanica Nivy by the Slovak-based, regional developer, HB Reavis delivered 70,000 sqm of new shopping centre space. The complex forms part of a mixed-use complex that includes 30,000 sqm of office space, a 3,000 sqm fresh food market and a 30,000 sqm bus terminal. HB Reavis sees the project as part of a wider commercial and leisure complex that enhances and upgrades the surround ing district. Also, in Bratislava J&T Real Es tate is extending the mixed-use, Danube river-front Eurovea complex with a second phase that will deliver around 25,000 sqm of retail. The complex includes the first residen tial skyscraper in Bratislava and a high-end BREEAM-accredited office component.

Total retail stock in Poland, the largest re tail market in the CEE region, has surpassed 15.6 million sqm according to Cushman & Wakefield. Over 400,000 sqm of space is in the 2022-2023 development pipelines, out of which 45 percent is in smaller cities with less than 100,000 sqm inhabitants, while retail parks account for 65 percent of this figure. Shorter construction periods, lower initial investment and the relatively straight forward possibility of phased construction are seen as some of the key drivers of retail park development in the region. From the demand perspective, smaller developments in smaller cities provide opportunities for de velopers in areas not served by modern retail at lower levels of investment.

Retail currently provides the highest yields among all commercial real estate segments and analysts see customers continuing to visit retail establishments, making shopping centres valuable assets. Although some retail

assets are available, large shopping centre owners are reluctant to exit from their assets in the current uncertain market environ ment and there is therefore no clear picture of where the investment market stands with regard to such retail assets. However, retail parks and smaller assets are attracting inves tors. The Czech Republic currently has the lowest CEE retail yields at 5 percent, com pared to Poland at 5.35 percent, Hungary at 5.25 percent and Romania at 6.5 percent.

In a major recent investment transaction, the Adventum Group acquired 273,000 sqm in 18 properties anchored by Tesco stores across Hungary and the Czech Republic. “Despite the uncertainty in the global capi tal markets over the past months, our com mitment to complete this transaction has been always supported by our investors and financing banks alike which is a testament to the investment strategy and the core ac quisition and asset management skills of Ad ventum as well as the resilience of this food anchored retail park portfolio,” commented Kristóf Bárány, founding partner of Adven tum Group.

“In unprecedented times of market turbu lence, this food-anchored retail park portfo lio offers safe haven for Adventum’s inves tors seeking inflation-adjusted returns and robust cash flow. By executing our ESG-fo cused refurbishment program and by the planned further diversification of the tenant mix with local and international tenants, we believe this retail park portfolio will serve the needs of local Hungarian and Czech con sumers even better,” he concluded.

Smaller developments in smaller cities provide opportunities

Nominations open for the 15th annual CEE Retail Awards and Marketplace

Winston Norman

THE FLAGSHIP RETAIL EVENT FOR THE REGION

The CEE Retail Awards & Marketplace is dedicated to today’s new look networking environment and delivers a professional platform for deal-making, relationship build ing and one-on-one or group discussions on the evolving retail investment and devel opment opportunities that are presenting themselves to the market.

Considered the market benchmark for retail success in Central and Eastern Europe, EuropaProperty is proud to host and pres ent the fifteenth annual CEE Retail Real Es tate Awards Gala, the region’s premier retail awards event. This eagerly anticipated occa sion will take place in Warsaw at the Inter Continental Hotel on February 9th, 2022.

The event opens with the CEE Retail & CEO Networking Forum, a series of discus sion panels covering all hot topics and rele vant issues for today’s dynamically evolving retail sector. The Retail Forum provides an opportunity to hear from some of the retail market’s leading thought leaders, as well as

opportunities to discuss and explore the re tail industries most important topics.

STAY CONNECTED WITH MARKETPLACE

This event consists of forums, networking, retailer platform, awards gala and online marketplace, as well as providing an excel lent opportunity to make new contacts and renew existing business relationships on a professional networking platform.

These are unprecedented times and Euro paProperty is fast becoming a multidiscipli nary enterprise with an array of mediums to help the industry move forward. Therefore, The CEE Retail Awards and Marketplace is ac tive and available to attendees and sponsors to utilise immediately.

E-RETAIL & INNOVATION

Meet the most active retailer, innovators, e-retailers, investors, developers, bankers, asset managers and CRE professionals active

or looking to enter the region. With over 600 directors – local, regional and international participants – this event is not to be missed.

As a backdrop to the whole event is the Marketplace and Retailer Networking Plat form, an online marketplace where develop ers and retailers can meet to discuss, formu late and make deals.

KEY RETAILERS

At the awards gala, retailers, real estate companies, projects and individuals will be presented with awards of acknowledge ment by the industry for their contribution to the development of the retail commercial real estate market in the region.

EuropaProperty is expecting more than 600 participants including over 100 retailers doing business or planning to do business in the region. This event is subject to con siderable media coverage with local and international media present. This ensures participants, companies, and award winners, an extra opportunity to publicize themselves

and of course the retail sector throughout the whole of Central and Eastern Europe.

NOMINATIONS

An independent Jury of leading real es tate professionals carries out the process of deciding between the nominations for the award categories. The members of the Jury are all experienced real estate professionals, and are from every sector of the commercial real estate and retail industries in the region.

The Jury will initially vote online on all the received nominations in early January to finalize the short list from all nominations received. The short-listed shortlisted semi-fi nalists then have their entries scrutinized by

the Jury who vote to decide on the winners, on the night before the gala at a jury dinner held at the InterContinental. The Event Audi tor, EY, audits the voting process. Countries eligible to enter the awards in clude: Poland, the Czech Republic, Hungary, Slovakia, Ukraine, Austria, Lithuania, Latvia and Estonia.

He was born in 1946 in Wrocław. He is a graduate of economics and management at Bar-llan University in Israel. He came to Poland from Israel in 1998. He was offered the position of managing director of Asbud, a company with Israeli capital.

In the years 1999–2002, working for GTC GROUP, he was managing director of Galeria Mokotów, the first real mall in Poland, which was built and commercialized under his personal supervision.

Another challenge is managing the project of Blue City, a shopping center in Ochota, Warsaw - starting from June 2002, when he supervised its construction, through its opening in April 2004, until today, when he is the vice-president of the board.

deadline set for early January 2023

Nominations

LIFETIME ACHIEVEMENT AWARD ANNOUNCED FOR YORAM RESHEF, VICE-PRESIDENT OF THE BOARD, BLUE CITY

Poland’s retail markets prove relatively robust during the crisis

The retail sector across Poland has been affected in varying degrees by the challenging trading environ ment caused by price increases that are being driven by shortages of raw materials and higher energy costs which are being amplified by the continuing conflict in Ukraine. However, the impacts on consumer confidence and retail activity are mixed.

Despite the deteriorating market condi tions, 2022 will probably be another year with a record level of new supply for the re tail sector in Poland. According to estimates by Walter Herz, the domestic stock of retail space will increase by around 530,000 sqm. The largest volume, almost 350,000 sqm of modern space will be provided by numer ous retail parks and convenience centres, which are mainly being built in smaller cities.

“Investors who operate in this sector of the real estate market in Poland have ex

tensive plans, including the construction of several dozen more retail parks in the next few years. The group of entities active in the retail segment is constantly growing, both in terms of investors looking for attractive assets and real estate development compa nies implementing projects”, commented Bartłomiej Zagrodnik, Managing Partner, CEO of Walter Herz.

He continued, “There are now about 30 investments under construction across Po land, including retail parks. Companies are

constantly looking for land for new prop erties that they want to implement in this format. Their saturation is not as high as that of large shopping centres and they still have great potential for growth.”

A closer look at Poland’s retail property market as a whole reveals that shopping centres represent the largest segment with 61 percent of the total. Retail parks currently account for around 14 percent of the floor space stock in the Polish retail property mar ket. While the market for large shopping

Prochownia Łomianki

Winston Norman

centres is more or less saturated, the retail park segment is growing at breakneck speed as the construction output shows.

During the first half-year of 2022, around 183,200 sqm of retail space came on-stream. Retail parks accounted for two-thirds of the total, while stand-alone retail warehouses claimed another 28 percent. Only six per cent of the newly completed floor space was located in traditional shopping centres. Roughly another 181,000 sqm of space in re tail parks alone are to go live before the end of 2022.

“As far as traditional shopping centres go, Poland has essentially caught up with west ern European markets,” commented Pepijn Morshuis, CEO of Trei Real Estate, a prolific re tail park developer in Poland with the Vendo Parks brand. “Germany’s eastern neighbour now has a density ratio of 258 sqm per 1,000 inhabitants in this segment, compared to 276 sqm in Western Europe. The retail park segment presents an entirely different pic ture: Here, the density ratio is only 84 sqm per 1,000 inhabitants. The low level of sup ply implies a significant potential for further growth.”

Mitiska REIM and local JV partner Karuze la have accelerated their expansion in the Polish market, building a portfolio of seven standing assets and six development pro jects totalling more than 150,000 sqm gross leasable area.

Sylvie Geuten-Carpentier, the Managing Partner at Mitiska REIM, commented: “In addition to the retail park portfolio, Mitiska REIM has built an extensive pipeline of addi tional convenience real estate opportunities in Poland, including urban logistics and mul

ti-let light industrial developments, working in partnership with local developers.”

In July this year, Mitiska REIM announced the first close at €137 million of its third flag ship fund, Mitiska European Real Estate Part ners 3 (MEREP 3), which aims to capitalize on the accelerating opportunity in convenience real estate across Europe, targeting gro cery-anchored retail parks, last-mile urban logistics and multi-let light industrial oppor tunities in urban infill locations.

Today, retail parks are the most attrac tive trading assets for foreign funds. Prior to the pandemic, before the interest in more expensive assets, such as shopping malls, dropped drastically, the transaction volume in the retail sector in Poland exceeded €2 bil lion annually, and in 2018 it even amounted to €2.5 billion. In 2021, despite a large num ber of transactions, investment purchases in this segment amounted to €1 billion.

“Retail parks are the most sought-after assets now, but their availability is not high enough. This segment offers a total of over 3.2 million sqm of space, which is about 15 percent of the resources of the commercial real estate sector in Poland. Over 60 percent of modern commercial space in our coun try is located in large centres,” explained Bartłomiej Zagrodnik.

The value of retail real estate transac tions in the first half of this year amounted to around €800 million. Investors focus on high-standard retail parks located in smaller cities that offer yields of up to 7.5 percent.

According to JLL, prime yields for high-end retail parks have maintained a stable level between 6.5 and 6.75 percent.

A recent transaction included Ghelamco’s sale of Prochownia Łomianki retail park. The new buyer of the building is LCP Properties Group, an active player in the retail park sec tor in Poland. The company is expanding its portfolio by acquiring new facilities and re alising investments under the development formula. At the beginning of 2022, the total area of LCP’s properties exceeded 360,000 sqm and their value reached €460 million.

“These types of facilities will remain our fo cus even in times of economic uncertainty, as they offer a guarantee of quality and rep resent a safe investment. By the end of the year, we will actively seek to acquire more re tail projects and are open to new proposals,” commented Krystian Modrzejewski, Group Operations Director, LCP Properties Poland.

French-listed real estate investment firm Frey acquired Park Handlowy Matarnia a 52,278 sqm retail park in Gdansk from Ing ka Centres for €105 million. This marks Frey’s first acquisition in Poland and a prelude to the company’s further expansion in the mar ket.

“This acquisition will enable Frey to con tinue to implement its strategy of becoming the European leader in sustainable retail,” commented Antoine Frey, Chairman and Chief Executive Officer of Frey.” A prime retail park ideally located in one of Poland’s most dynamic cities, Matarnia Park Gdansk bene fits from the attraction of one of Poland’s first IKEA’s on site.”

BIG Shopping Centers also entered the Polish market for the first time by purchas ing two retail centres with a total value of €65 million. Hay Galis, CEO of BIG, noted that these two acquisitions support the compa

Vendo Park Otwock

ny’s growth plans to become a dominant player in the retail park sector in Poland.

Falcon Investment Management, a new investment fund operating in the retail park sector also has ambitious development plans, which it is systematically pursuing with support from its various business part ners through forward purchasing deals, joint ventures, the purchase of completed pro jects, and also the development of its cen tres.

“We are entering the market with clearly defined goals. We want to create a chain of retail parks that comprises so-called Power Centres, which dominate their regions. We are buying and building centres for ourselves with a long-term horizon and that means we place great importance on the quality of our portfolio,” said Piotr Piechocki, the founder and chairman of the board of Falcon Invest ment Management.

Currently, the fund has secured 12 pro jects at different stages of development. The fund’s business partners include companies such as TUF RE, BOIG and Acteeum Central Europe.

Pepijn Morshuis went on to say: “Just like in other countries, the macroeconomic sit

uation in Poland is defined by very high inflation rates and fast-rising interest levels. In September, the inflation exceeded 17 per cent. Poland’s central bank quickly raised its key lending rate in the year. The most recent interest rate hike on 7 September brought it up to 6.75 percent. Against this background, the stability of the retail park segment is very reassuring.”

Tenant-side demand for retail units re mains strong in Poland. Over the past three years, 50 international retailers entered the Polish market. During the same period, 18 retailers exited the market again. “Given the challenges created by the pandemic, we consider these figures to be excellent,” said Morshuis.

“The interest in new retail parks is not waning, both on the part of developers and tenants, as well as on the part of investors. Tenant mix means that retail parks and small er shopping centres are focused on every day shopping and are thus more resilient to weakening purchasing power than larger shopping centres. Larger shopping centres will increasingly serve as experiences, enter tainment and gathering places. The problem may be for medium-sized malls, which will

have to find a way to attract shoppers,” said JLL.

The going prime rents at retail parks are €8.0 to €12.0 sqm/month. Prime rents have so far been stable at the level of previous years. But given the increase in construction costs and interest rates, rents will inevitably go up in the future. However, one major ad vantage of the retail parks is their low service charges. At present, they are somewhere between €1.5 and €2.0 sqm/month. For the sake of comparison: Service charges in shop ping centres can run as high as €20 sqm/ month.

Walter Herz analysts estimate that 2022 may be better for the sector than last year, not only in terms of new supply but also transactions. The bill facilitating the conver sion of commercial buildings into residential projects may affect the increase in the vol ume of transactions. However, there may be difficulties caused by the lack of access to financing for the purchase of large shopping centres, as opposed to retail parks.

Dekada Grójec

For further infor mation please contact:

Craig Smith: +48 577 100 620 craig@europaproperty.com Sylwia Gajda: + 48 501 091 751 sales@europaproperty.com

Refurbishment and mixed-use schemes dominate retail development

The latest major edition to the Budapest shopping centre market is the 55,000 sqm Etele Plaza by the prolific Hungarian developer, Futureal, which has just celebrated its first anniversary. Prior to the opening there had not been a delivery to the capital’s shopping centre market in several years. No further shop ping centres are planned and the major forms of retail development are as part of mixed-use projects and smaller regional retail centres.

In Budapest, the refurbishment of exist ing shopping centres is the dominant form of development as centre owners strive to reposition their assets to meet current ten ant and consumer expectations. “Pipeline is unchanged and very weak in the tradi tional retail formats like shopping centres and retail parks. There have not been any commencements recently so the planned

pipeline is unchanged, however, delayed refurbishment works dominate in existing centres, and technical and design face-lifts are becoming common practice in the retail park stock – in some cases driven by recent changes in the ownership,” commented CBRE.

Analysts see Etele Plaza as a welcome freshening of the Budapest shopping cen

tre market as much of the existing earli er-generation stock is seen as outdated in the post-pandemic and e-commerce retail environment. Shopping centres are seen as having a continued pivotal role in the Buda pest retail market. The indications are that despite the rise of e-commerce, as online penetration is expected to rise to 14 percent

Allee shopping centre in Budapest

Gary J. Morrell

of retail activity by Euromitor, Hungarians in large part still prefer the experience of shop ping in a physical environment if the project meets the needs of consumers in terms of design and amenities.

The Etele Plaza complex includes around 180 retail outlets, entertainment and service outlets including restaurants and green roof terrace, cafes, a multiplex cinema, a gym and 1,300 parking spaces located at a transport hub at the Kelenföld railway station, metro line 4 and the approaching section of the M1-M7 motorways.

The development is BREEAM Very Good certified and Futureal is looking to achieve WELL certification, although there is current ly no provision in the organisation for shop ping centre accreditation. The retail concept was designed by Chapman Taylor, the archi tect was the Hungarian firm Paulinyi-Reith & Partners and interior design was undertak en by Dyer.

The €300 million project was undertaken in 2018 with finance from UniCredit and the Erste Group. The plaza forms part of a mixeduse development on a brownfield site at a transport hub with easy access from res idential areas with 230,000 people within close proximity, according to Futureal.

Cushman & Wakefield put total mod ern shopping centre stock in Budapest at around 820,000 sqm, which is low by Euro pean standards. The consultancy has traced a total of 1.3 million sqm of shopping centre space across Hungary. The leading Budapest centres are generally considered to be the

47,000 sqm Allee, the 58,000 sqm Mammut, the 30,000 sqm MOM centre, the 66,000 sqm Arena Plaza, the 45,000 sqm WestEnd City Centre and the 68,000 sqm Árkád centre. Many of these have changed hands since completion and owners are planning or have undertaken renovation of what is often outdated earlier generation centres.

No further shopping centres are planned in Budapest and redevelopment and ren ovation of existing centres is currently the central mode of shopping centre develop ment in Budapest as owners strive to update their assets to meet the new market de mands. In the latest refurbishment the retail asset manager, Multi Corporation, as centre managers and designers, have completed the €18 million refurbishment of the Allee Shopping Center in what it describes as en hancing the “interior and exterior design and investing in sustainability to pave the way to carbon neutrality.” The complex has received BREEAM Outstanding accreditation follow ing the renovation.

Allee is owned by Allianz Real Estate and an investor represented by CBRE Investment Management, who started the refurbish ment works in 2020. As part of the work the food court has been extended with more restaurants and cafes added.

“The renovation has been transformation al and Multi Corporation did a great job cre ating an enjoyable experience for customers, while at the same time improving energy efficiency and reducing carbon emissions in the shopping centre,” commented Philippe

Brand, senior portfolio manager at CBRE In vestment Management.

Allee, located in the central Buda side of the city is located close to Etele Plaza and therefore the two centres could be seen as being in direct competition as they are a short tram ride or drive apart.

As shopping centre owners are rebrand ing, restructuring the design and upgrading the tenant mix of their projects, sustainable elements are added to the design and PM. Wing has undertaken what it describes as a complete restructure of its EuroCenter in Obuda and it is now rebranded as the GOBU DA Mall.

According to Wing, the 25,000 sqm centre offers 100 stores and a large service function. The interior and exterior have been com pletely renovated and a green roof added. A 140-meter passage has been developed to house fashion outlets. The company em phasise the natural light that penetrates the centre through modernised roof windows.

“GOBUDA mall is a modern shopping centre answering today’s needs by accom modating approximately 100 stores as well as offering service functions. The tenant mix was selected to meet local demands and thus includes grocery stores, service units as well as shops to serve day-to-day shopping and administrative needs,” commented Wing on the redevelopment project.

CPI, another established developer in Hungary, has refurbished the 40,000 sqm earlier generation Campona shopping cen tre in the outskirts of South Buda with new

GOBUDA mall by Wing

tenants and what it describes as putting en tertainment at the centre of the retail expe rience. “The revitalised Campona will meet new shopping centre trends with a sophis ticated interior design and a focus on enter tainment,” said CPI.

Outside Budapest another component of possible retail development is in retail parks with a large hypermarket or food content. In a major recent investment transaction, the Hungarian investor, Adventum acquired 273,000 sqm in 18 properties anchored by Tesco stores across Hungary and the Czech Republic. There is currently around 2.7 mil lion sqm of retail park space in Hungary with

a pipeline of 72,000 sqm according to Cush man & Wakefield.

Immofinanz has a portfolio of 14 Stop Shops, its brand name for its retail park portfolio, in Hungary, three of which are lo cated in Budapest. “We aim to create neigh bourhood centres with a catchment area of 30,000-150,000 people,” said Immofinanz.

A further development possibility is for street-front retail as part of mixed-use or office complexes. Szervita Square in the historical centre has a high-end street-front retail element. Further, the centrally located Emerald Residence project by Biggeorge has a retail element in addition to residential and

boutique hotels. Budapest’s high street retail totals 78,000 sqm with a 3,000 sqm pipeline according to Cushman & Wakefield. The Bu daPart complex includes a major street-level retail and service element alongside the of fice, residential and leisure elements over looking the Danube.

GABOR BORBELY

Director of Research & Business Development, CBRE Hungary

The major forms of retail development are as part of mixed-use projects for example the BudaPart development project with office, residential and hotel el ements served by retail and service provision and retail centres in cities outside Budapest of around 15,000 sqm with a strong hypermarket provision. In Budapest, the refurbishment and repositioning of existing shopping centres in Budapest is the dominant form of development.

REVETAS CAPITAL’S RETAIL PORTFOLIO REACHES 97 PERCENT OCCUPANCY IN HUNGARY

Revetas Capital announced that it has achieved an occupancy rate of 97 percent in Park Center, its retail portfolio of 12 properties in Hungary. Fol lowing successful lease transactions in Miskolc and Debrecen with one of the leading retailers in the non-food sector, the total occupied area increased to over 44,600 sqm across the portfolio. In 2013, Revetas Capital completed the successful acquisition of the investment portfolio in Hungary, comprising 12 retail neighbourhood shopping centres with a total area of over 45,000 sqm, which were successfully rebranded as Park Center Hungary retail parks. Eric Assimakopoulos, Founding Partner Revetas Capital, commented: “The Gau di portfolio was one of the most ambitious investments we made in 2013 and a prime example of resilience and value-enhancing intensive asset manage ment for our investors. During the holding period, we navigated one of the most challenging decades for retail as an asset class, additionally intensified by the dynamics of the following economic downturn triggered by the Global Financial Crisis and the massive traffic and operational restrictions imposed by the COVID 19 pandemic, and we are proud of the team’s results despite the current context.”

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Czech and Slovak retail seen as stable

The Czech and Slovakia retail markets are seen as consolidated with low retail development pipelines, although there are a few major city centre projects ongoing that form part of wider mixed-use urban regeneration projects. At the same time, shopping centre owners are looking to redevelop existing outdated stock.

A number of leading developers have de livered smaller shopping centres and retail parks across the major regional Czech and Slovakia regional cities, where there are high shopping centre densities in relation to the population sizes. Overall retail demand is strong, as Prague in particular is attracting a significant number of international retail ers, and footfall and sales are approaching pre-pandemic levels, however as elsewhere developers are faced with the increasing cost of finance and rising construction ma terial, labour and energy costs.

Around 68,000 sqm of retail space is un der construction in the Czech Republic with new development primarily consisting of retail parks up to 5,000 sqm according to Cushman & Wakefield. Although a number

of shopping centre extensions are also in the pipeline as owners look to update, repo sition and extend their assets to meet the changing demands of tenants and consum ers. However, in the current consolidated market environment, retail development is at the lowest level since 2011 according to CBRE. Having previously increased on an an nual basis.

“The permitting process, construction costs and construction and labour and ma terial availability have significantly affect ed future development and have already caused postponements of several projects. Currently, we have monitored 11 projects with a total volume exceeding 300,000 sqm with an expected opening in the next five years,” said CBRE.

Due to rising construction costs and the prolongation of construction periods, there are very few projects under construction in the view of Cushman Slovakia. Again, a num ber of small retail park schemes are in the pipeline in addition to a number of shop ping centre pipelines.

In the most significant development in Bratislava, J&T Real Estate is extending the mixed-use, Danube river-front Eurovea com plex with a second phase that will deliver circa 25,000 sqm of retail, the extension is due to be complete in spring 2023 and will extend the retail offer at the complex to around 85,000 sqm. The complex will include the first skyscraper in Bratislava, a 168-meter residential building with 48 floors. In the of fice component, the 18,000 sqm Pribinova X

Eurovea mixed-use project in Bratislava

Gary J. Morrell

will provide 18,000 sqm of BREEAM Excellent office space and the 22,000 sqm Pribinova Y will deliver BREEAM Oustanding space.

“Eurovea and its extension are part of the transformation of a former industrial area into a new city centre and support the 15-minute city centre concept, meaning they help improve the sustainability of the entire city,” commented Lobos Kastan, pro ject manager at JTRE. The developer expects the extended complex to attract as many as 65,000 visitors a day.

The mixed-use complex, designed by the Slovak studio GFT and the open spaces de signed by the Barcelona-based BB+GG archi tects studio, reflects the trend for developing retail as part of a mixed-use complex, in this case with retail, leisure service, residential and office space overlooking the river with extensive green spaces.

In the other significant Bratislava devel opment, Stanica Nivy by the Slovak-based, regional developer, HB Reavis has delivered 70,000 sqm of new shopping centre space. The complex forms part of a mixed-use complex that includes 30,000 sqm of office space, a 3,000 sqm fresh food market and a 30,000 sqm bus terminal. Although ques tions have been raised about the possibility of market saturation the project is seen as providing a new generation of retail as part of a wider commercial and leisure complex that enhances and upgrades the surround ing district by the developers.

Total shopping centre stock in the Czech Republic stands at around 2.6 million sqm with 956,000 sqm in Prague, 248,000 sqm in Brno and 224,000 sqm in Ostrava. Only Ol omouc has a 24,000 sqm shopping centre

pipeline according to Cushman & Wakefield. CBRE has traced 2.5 million sqm of retail space across the Czech Republic as Shop ping centre density exceeds 230 sqm per 1,000 inhabitants.

Czech developer Crestyl has started con struction work on the Dornych shopping and mixed-use centre in Brno, close to the city’s main railway station. The new multi functional complex is designed to connect the historic old town of the city with the planned southern quarter. Dornych is ex pected to take four years to complete. In vestment costs are estimated around €284 million.

Total shopping stock in Slovakia stands at circa 1.4 million sqm according to Cushman & Wakefield. About 42,000 sqm of stock is

currently under construction across Slovakia, however, the development of new projects is subject to delays due to increasing construc tion costs. CBRE has traced around 536,000 sqm of shopping centre space, 33 percent of which is located in Bratislava. While from the 802,000 sqm of retail parks, 78 percent is located in the regions. The total retail stock has more than doubled since 2017.

Shopping centres in the Czech Republic outperformed pre-pandemic levels in terms of sales by 4 percent in the first half of 2022 but visitor levels were down by 7 percent compared to the same period of 2019 ac cording to Cushman & Wakefield. The con sultancy puts overall vacancy in the Czech Republic at 3.6 percent as of summer, repre senting a record low. Further, the country is

PAVOL KOPERNICKÝ

Head of Retail Agency, Cushman & Wakefield Slovakia

As we can see now, retail parks dominate retail development in the whole CEE re gion. They fill the gap in smaller regional cities, where bigger shopping centres would be “too much”. The trend for the development of retail parks has the potential to persist in the next years. There is space for shopping centre development in Bratislava but they need to have the right location, well-built infrastructure, a great tenant mix and ideally strong mix-use elements as well.

Crestyl is developing the Dornych shopping and mixed-use centre in Brno

seen as remaining attractive for international brands as the Czech retail market recorded 15 new brand entries in the first half of the year. Sales volumes for the third quarter in creased by 15 percent compared to the same period in 2019, representing an overall annual 10 percent rise on the previous year according to CBRE. However, footfall lagged behind 2019 by 10 percent.

At the same time, retail sales in Slovakia in the first half year performed on a level with pre-pandemic levels in 2019. Further, prime retail rents and yields remained stable.

With regard to investment prospects, the retail sector is still regarded as an attractive sector for investors. “It provides the high est yields among all commercial real estate segments and people will continue visiting retail establishments. Assets are still availa ble as there are plenty of assets which did not change hands in previous years,” said Pavol Kopernický, head of retail at Cushman & Wakefield Slovakia.

As elsewhere in the wider European re tail markets, faced by the threat of e-com merce, centre owners and developers need

to create an appealing and inspiring envi ronment for the customer, which cannot be replicated online. Asset owners and de velopers are responding by extending and redeveloping existing schemes and creating diverse tenant mixes, improving the F&B and leisure offerings and overall design.

Strong retail pipeline in Romania

Romania has a strong shopping centre and retail park pipeline, mainly in regional cities as the Bucharest market is seen as consolidated. Retail demand is seen as healthy as Romanians tend to have a preference for the physical experience of shopping despite the opportunities provided by e-commerce.

Cushman & Wakefield have traced a retail pipeline of around 140,000 sqm currently under construction and set to be delivered by 2025 with more projects totalling around 610,000 sqm at different stages in the plan ning process. This confirms the potential for further robust development argues the con sultancy.

“The elimination of all the pandemic-re lated restrictions resulted in a consistent initial increase in both footfall and sales in physical stores,” commented Dana Radove neanu, head of the retail agency at Cushman & Wakefield Echinox. “This dynamic, support ed by both food and non-food sales, can be noticed in the developer expansion plans in Romania, as currently, almost 250,000 sqm of new projects are under construction and are due to be delivered by 2025, the new invest ments consisting of both shopping centres and retail parks. The main targets for new

projects in 2022 will once again be the cities with less than 150,000 inhabitants, and retail parks will be the dominant format. However, starting from 2023 we will see a return to wards large cities and shopping centres.”

Prime Kapital-MAS RE is planning to ex tend the Mall Moldova in Iasi to 58,000 sqm serving a 644,000-person catchment area according to the developers. In another project, the specialist retail and residential developer is due to complete the 28,000 sqm Alba Iulia Mall in the coming months. The complex will be the first modern shop ping centre in the city. In another project, the 63,700 sqm Promenada Craiova by NEPI Rockcastle is due to be completed this year. In a retail park development another prolific developer in Romania, AFI Europe is devel oping the 29,000 sqm AFI Arad Retail Park.

“Romania has quite a lot of space for the development of shopping centres in various

cities, more so in some cities (Cluj-Napoca, Iasi, Craiova) than others (Timisoara, Oradea, and maybe Sibiu). Issues in the past con cerned both the timing of the project and securing a good land plot in a prime location that would establish a new project as domi nant location on the local market and secure a strong customer flow. This has been easier said than done in the past, but we are seeing some progress and newer projects are pop ping up in these cities,” said Liana Dumitru, head of retail at Colliers Romania.

Cushman & Wakefield Echinox put total shopping centre stock in Romania at 2.3 million sqm. The majority of this is located in Bucharest followed by Cluj-Napoca and Timisoara. According to CBRE Romania total modern retail stock in Romania has reached 4.05 million sqm, retail parks represent 37 percent of this stock and will soon reach 50 percent. This will result in a balanced mod

Refurbished VIVO in Baia Mare

Gary J. Morrell

ern retail stock as it will cover more of the country. Around 30 percent of retail stock is located in the capital and 70 percent in the regions.

A further trend is a retail component as part of mixed-use developments. “To a cer tain extent, retail is already part of the mix when the larger office or residential projects are developed in Romania. For instance, One Cotroceni Park, a mixed-use project from lo cal developer One United, will feature over 15,000 sqm of retail spaces alongside 80,000 sqm of modern offices and 868 apartments. This is at the higher end of what traditional office developers here allocate for retail, but its size has been on the rise for several years now, as a good retail mix is seen as essen tial in attracting and keeping tenants happy. Likewise for larger residential projects,” com mented Liana Dumitru.

With regard to the threat of e-commerce to the physical retail market, Liana Dumitru argues that the first major factor is the fact that Romania’s over four million sqm of mod ern retail spaces falls well short of Poland, which has closer to 14 million sqm, but twice the population. The Czech Republic also has roughly four million sqm of modern retail spaces for a population that’s 44 percent smaller than Romania. So, the relatively low stock has acted as an insulating factor.

The second major factor is the fact that Romanians seem to be one of the (if not the most) culturally predisposed people in the EU to want to touch and feel a product before they buy it, as per Eurostat surveys. So, there is a cultural aspect at play as well, which can explain why both brick-and-mor tar and e-commerce sales have been grow ing exponentially alongside one another for

the past 10 years. We also need to mention that despite e-commerce activity settling at a much higher level than before the pan demic, for the dominant shopping centres in large cities, it is almost business as usual with regard to visitors/customer spending.

“Annual growth in e-commerce retail sales accelerated during the pandemic as more consumers shopped online, but once the re strictions were lifted Romanians returned to the physical stores. This change can be ob served in the evolution of online sales dur ing this year which witnessed slower growth compared with last year. However, the ma jor retailers use omnichannel e-commerce aiming to deliver a shopping experience for customers both in stores and online,” added Dana Radoveneanu.

DANA RADOVENEANU

Head of Retail Agency, Cushman & Wakefield Echinox

Most of the shopping centre owners invested an important amount of money in renovation and refurbishment projects during the pandemic restrictions. We saw also shopping centres which have benefited from a change in the tenant mix, or in the redesign of the layout in order to meet consumer demand. We believe that the retail market should anticipate consumer needs, and be proactive in order to respond to consumer behaviour change. Romania offers numerous advantages for retailers: a low unemployment rate, increasing purchasing power, and private con sumption growth. Therefore, we have seen new names entering the market during 2021 and 2022, representing all types of retail activity (Primark, Foot Locker, Pop eye’s, TEDI, JD Sports, Suwen Lingerie, and Anson’s amongst others). Moreover, there is an increased interest from other international retailers in entering the Romanian market, a strategic market in this part of Europe.

LIANA DUMITRU

Head of Retail, Colliers Romania

The market is increasingly focusing on smaller formats, retail parks/convenience centres/strip malls with regard to new projects. New developments are less focused on Bucharest and the large cities, they are rather looking at medium and small-sized cities (sometimes even below 50,000 inhabitants) as these were overlooked during the consumption boom taking place post-2012. In short, no town, regardless of how small, will be without at least a modern retail scheme if there is some economic activity present there. Regardless of the focus on retail parks and smaller formats, which has been caused by the geographic focus of developers and is now sustained by the fact that such units require a lower Capex, there are still some large malls/ expansion projects on the horizon in Romania in various large cities due in the next few years. So, the dominance of smaller formats/retail parks (which have generated the vast majority of delivered shopping centres in recent years) may shift a bit come 2024-2025.

Development pipeline dominated by retail parks

The delivery of more than 150,000 sqm of modern shopping centre stock in the last few years has posi tioned Belgrade in line with other similar size regional cities from a retail perspective according to CBRE. Consequently, future development will mainly consist of retail parks throughout Serbia in the view of an alysts. At the same time, shopping centre owners are looking to redevelop their assets to meet changing demands from consumers with the increasing competition from e-commerce.

As with elsewhere in the Central European region, the year has been slow with regard to new retail construction projects. Although spring saw the opening of the first phase of AVA Shopping Park, a retail park developed by IKEA and located adjacent to the IKEA big box scheme that opened in 2017. The €55 million project has 35 domestic and interna tional brands served by 1,200 parking spaces and electric vehicle facilities.

Branko Mihajlov, general project manag er at IKEA for Serbia, said: “The opening has increased Belgrade’s quality retail stock by 18,000 sqm while a second phase is due to deliver a further 10,000 sqm in spring 2023, bringing IKEA’s total investment in the coun try to €125 million.”

Quality retail stock in Belgrade reached 573,000 sqm in the first half year, represent ing 345 sqm per 1,000 inhabitants according to CBS International, part of the Cushman & Wakefield Alliance. CBRE has traced around 430,000 sqm of shopping centre space in Belgrade with growth in stock levelling off since 2021.

“Belgrade retail supply reached 580,000 sqm, out of which seven formats are consid ered to be modern Western-style shopping centres, totalling around 307,000 sqm GLA or 53 percent. With current stock and 350 sqm of retail space per 1,000 inhabitants, Belgrade is still behind the other cities in the region. With the opening of three shop ping centres in the last three years, the total

stock of modern shopping centres has been doubled, therefore it looks like the shopping centre market in Belgrade is currently quite developed and I believe that for the time being there will not be new developments in that field,” said Dusan Miletic, director of brokerage operations at CBS International.

“However, if we take into consideration all New Belgrade residential projects with new areas, future developments and infrastruc ture projects such as the subway, national stadium and construction of Belgrade EXPO 2027 a modern multifunctional complex with more than 830,000 sqm of exhibition space, we are positive that they will create space for new retail development projects in the near future,” he added.

Galeria Belgrade

Gary J. Morrell

CBS International have traced pipeline projects such as the extension of existing schemes in the Belgrade suburban mu nicipalities of Obrenovac and Mladenovac bringing the total retail pipeline to 17,000 sqm. In two redevelopment projects, the 47,000 sqm Usce shopping centre by the Serbian developer MPC Properties will un dergo reconstruction while the BEO shop ping centre in Belgrade, by MPC Properties and Atterbury Europe, will undergo an ex tension of existing terraces and addition al retail units. Eurasia has announced the development of a shopping centre in New Belgrade, for which they have purchased a development plot.

Total modern retail stock in Serbia stands at 1.18 million sqm and 35 percent of this consists of retail parks according to CBS In ternational. Retail parks are the favoured development model outside the capital. The Israeli Big CEE is extending its retail park network with a project in Stara Pazova and another planned in Kragujevac.

“Investors are focused on the construc tion of retail parks in secondary and tertiary locations, and many existing retail parks are expanding their capacities by extension, in order to enrich the existing offer,” said Ivana Maksimović, head of property management & SEE Retail at CBRE.

As existing landlords are facing new com petition, they are under pressure to reposi tion and renovate their assets in order to im prove the offer and try to differentiate from their competitors. “Over the previous 12 months we have noted landlords announc ing and undergoing refurbishment of the first-generation shopping centres in the cap ital, but also extensions in order to improve their offer. All of the changes are following up with the changing consumer preferences which nowadays are more experience-driv en, which includes additional non-shopping content,” commented Ivana Maksimović.

E-commerce in Serbia has been constant ly growing in the last couple of years and its share of total retail trade is between 15 and 20 percent according to CBS International.

“The growth of online shopping in the last two years was mostly caused by the corona virus pandemic, which changed the habits and behaviour of consumers, as well as the organisation and operations of companies. However, during the same period, we have also seen the growth of traditional sales and it is expected that both traditional and on line sales will continue to develop in parallel in future,” commented Dusan Miletic on the challenge of e-commerce for retail develop ers.

The boundary between online and offline shopping is becoming increasingly vague in the view of Ivana Maksimović. Omnichan nel, i.e., combining various sales channels tailored to the consumer’s individual needs, has become an evident trend in retail. This trend requires the development of e-com merce, which has been significantly accel erated recently. It is estimated that by 2026, the share of online shopping will amount to 10 percent of the total retail turnover in Serbia.

“Reinventing, repositioning, introducing a large proportion of entertainment, focusing on F&B segment and fine-tuning of existing projects with constant work on the attrac tiveness of the overall offer is very important for all investors. Additionally, creating syn ergy with their tenants in order to increase their experience in their stores and constant improvement is important, as well. All of these factors will increase dwell time and extend shopping hours and I am sure that investors who are aware of and can recog nise the importance of experience will win the game,” concluded Dusan Miletic.

The boundary between online and offline shopping is becoming increasingly vague

DUSAN MILETIC

Director of Brokerage Operations, CBS International, member of Cushman & Wakefield Alliance

Retail parks are the leading development sector in Serbia, having made a huge expansion in the previous few years and this trend will continue to grow in the future as well. Currently, the total modern retail stock in Serbia amounts to 1.18 million sqm and 35 percent of this belongs to the retail park formats, being con structed in 25 cities throughout Serbia. Shorter construction periods, lower initial investment, as well as the possibility of phased construction are the key drivers of the increasing interest of investors in retail parks all over Serbia. On the other hand, and from the tenants’ perspective, attractive rents (between €8-12 sqm per month), shopping in one place, high footfall and good future turnovers make their decision to open new stores in this type of project far more feasible. Regarding those indicators, the retail park pipeline in the next two years will increase by at least an additional 100,000 sqm through the extension of existing projects, and new projects in secondary cities and Belgrade.

IVANA MAKSIMOVIĆ

Head of Property Management & SEE Retail

CBRE

Having in mind that over the previous year more than 150,000 sqm of modern shopping centre stock was delivered, which positioned Belgrade in line with other similar size regional cities, we expected that developers will remain focused on the development of retail parks throughout the entire country. When it comes to Serbia, investors are focused on the construction of retail parks in secondary and tertiary locations, and many existing retail parks are expanding their capacities by extension, in order to enrich the existing offer. The availability of units in Belgrade is still limited having in mind that the vacancy rate is below 8 percent. We have not ed the increase of available space due to new supply, which almost immediately brought various new brands onto the market. There are various European brands looking to enter the market which we will witness in the following 12 months.

Ruma Go Shop, regional retail project in Serbia

Top Real Estate firms celebrated at the 12th annual CEE Investment Awards

EuropaProperty has successfully completed its 12th annual CEE Investment Awards at the Intercontinental Hotel in Warsaw, Poland. The awards cere mony was once again witnessed by a sizeable group of senior European and Central European real estate professionals; affirming the event’s status as a true landmark event for the investment sector.

Griffin Capital Partners, Revetas Capital, Fortress REIT and Capital Park Group were this year’s big winners, collecting multiple awards across all the main investment cate gories. CBRE Investment Management, Sav ills Investment Management, Solida Capital Europe and Gleeds also walked away with some of the big prizes.

Griffin Capital Partners picked up a couple of the main investment accolades including Opportunistic Investor and the coveted PRS Investor award. Some of the company’s year ly highlights included advising EPP on the sale of a 70 percent share of Towarowa 22 in Warsaw to AFI Europe. On the logistics side, the company’s logistics platform ELI sold the Nexus portfolio to CBRE Investment Man agement.

Revetas Capital was recognised by the jury for its successful multi-asset investment strategy in the region. The investor collected two awards including Retail and Value-add Investor. Union Investment picked up the Of

fice Investor award, and one noticeable deal closed by the company was the acquisition of the Szervita Square building in Budapest.

Savills Investment Management collected the Investment Deal award in the category €100 million + category for its acquisition of a couple of Invesco Real Estate’s logistic properties outside of Warsaw. In the Mega Deal category, Google and Ghelamco were awarded for their record-breaking single-as set transaction of the Warsaw Hub develop ment in the Polish capital.

Fortress REIT was recognised as the Core and Warehouse Investor for its acquisition and development strategy throughout the region. Investment recognition also went to CBRE Investment Management as Invest ment Asset Management Firm.

Capital Park Group’s Kinga Nowakowska was named this year’s Industry Profession al. The jury appreciated her professionalism and dedication in bringing the highly ap preciated mixed-use Norblin development

to realization in Warsaw. Another personal award was handed out to Gleeds’ retiring Managing Director Tadeusz Jachowicz for Lifetime achievement.

The Rising Star Award was presented to Solida Capital, a newcomer to the region, specialising in opportunistic investments. The company also received the Investment Deal award in the €20-50 million category for its acquisition of West 4 Business Hub in Wroclaw, a growing secondary location in Poland.

In the Investment Deal category €50-100 million Macquarie Asset Management’s acquisition of the Żabka BTS Radzymin de velopment was voted the best. Żabka and developer 7R also collected the Warehouse Development of the Year award for the same BTS distribution centre near Warsaw.

Widok Towers in Warsaw was voted Office Project of the Year. The recently developed office complex was deemed by the Jurors to be the best example of a leading Class A

Winston Norman

office development as well as accentuating the strength of Poland’s office market. Oth er developments recognised by the awards included the completely refurbished Norblin by Capital Park Group in Poland.

HB Reavis, a leading real estate develop ment and investment company operating in CEE and focusing on the development of large-scale commercial projects, took the Office Developer of the Year award, after be ing recognised by the Jury for its continued successful sustainable-development model across the region.

Accentuating the strength and interest in the region’s investment and development sectors, a number of developers were award ed for their recently delivered projects in all the main development sectors. Trei Real Es tate was recognised for continued success and development in the strongly perform ing retail park sector, winning the Retail Developer award. In the re-emerging hotel sector, the Hotel Developer award went to Puro Hotel Development.

ESG is now at the forefront of develop ment principles and is an important topic today. In this way, the challenges to the de velopment and investment industry and the implementation of such principles were tak en into consideration when deciding on the winning projects.

UBM Development’s Hotel Mercure Ka towice Centrum was voted Hotel Project of the Year. Drucianka Campus, a new mixeduse urban regeneration project set for War saw by Liebrecht & wooD won the Future Project award. Kajima Properties Europe and its JV partner Tonsa along with Olivia Cen tre the scheme’s development and asset manager won the Residential Project of the Year award for their Modular BTR project in Gdańsk.

Panattoni was once again recognised as Warehouse Developer for its outstanding development expansion across the region and beyond. Echo Investment was awarded Residential Developer of the Year. The jury recognised the company’s growing Resi 4Rent Platform in Poland.

Bank PEKAO was voted this year’s Bank of the Year. The specialist bank was recognised for its core business of lending and the im portant role it plays in supplying credit to the real estate industry in these most challeng ing times.

Savills walked away with the Corporate Agency Award. Manufacturer of the Year went to Toyota Motor Group and DHL Sup ply Chain was recognised as Logistics Com pany of the Year. The Property Management award went to Cushman & Wakefield. The Serviced Office Award went to New Work, and APA Wojciechowski walked away with the Architectural Firm of the Year award.

Further company awards went to Arcadis for Professional Service Provider, TPA Poland and Baker Tilly TPA was once again voted this year’s best Tax and Financial Adviser, and Dual Asset was voted the best Title Insurance Provider. Gleeds walked away with the Pro ject Management Firm award.

Other industry winners included Green berg as Law Firm, Kajima as Construction Firm and Strabag Property and Facility Ser vices for Facility Management Firm. Lodz picked up the City of the Year award.

E-commerce growth, innovation and suc cess was highlighted in the E-commerce cat egory which was won by the online fashion platform Zalando.

On behalf of our sponsors, judges and attendees, we offer our congratulations to all the winners. Foundations are already in place for next year’s event, which promises to be even better.

The 13th annual CEE Investment Awards will be held on October 26th, 2023.

12th annual CEE Investment Awards Winners 2022

E-commerce Company

Zalando

Professional Service Provider Arcadis

Architectural Firm APA Wojciechowski

Facility Management Company Strabag Property and Facility Services

Serviced Office Provider New Work Offices

Construction Company Kajima

Title Insurance Provider DUAL Asset

Law Firm Greenberg Traurig Grzesiak

Tax and Financial Advisor TPA Poland and Baker Tilly TPA

Project Management Company Gleeds

Property Management Company Cushman & Wakefield

Logistics Company DHL Supply Chain Manufacturer Toyota Motor Group Corporate Agency Savills Bank Pekao Bank

Retail Developer Trei Real Estate

Residential Developer Echo Investment Hotel Developer Puro Hotel Development Warehouse Developer Panattoni

Office Developer HB Reavis City Łódź

Future Project Drucianka Campus – Liebrecht & wooD – Poland

Hotel Project Hotel Mercure Katowice Centrum – UBM Development – Poland

Warehouse Project Żabka BTS Radzymin – Żabka Property/7R – Poland

Refurbishment/Retrofit Project Norblin Factory – Capital Park Group – Poland

Residential Project Modular BTR project in Gdańsk – Kajima Properties – Poland

Office Project Widok Towers – S+B Gruppe – Poland

Investment Deal €20-50 million Solida Capital Europe acquired West 4 Business Hub

Investment Deal €50-€100 million Macquarie Asset Management acquired Żabka BTS Radzymin

Investment Deal €100 million plus Savills Investment Management acquires A2 Warsaw Park logistics from Invesco Real Estate

Investment Deal €500 million plus Ghelamco Poland sold Warsaw Hub to Google

PRS Investor Griffin Capital Partners Retail Investor Revetas Capital

Warehouse Investor Fortress REIT Limited Office Investor Union Investment Investment Asset Management Firm CBRE Investment Management

Opportunistic Griffin Capital Partners Value add/core+ Revetas Capital Core Fortress REIT Limited Rising Star Award Solida Capital

Professional Kinga Nowakowska – Capital Park Group

Lifetime Achievement Award Tadeusz Jachowicz – Gleeds