Malls blossoming despite economic squeeze

The screw may be tightening on the Polish economy, but there has never been a better time to shop.

Despite a looming recession, shopping mall construction continued without let up this year - particularly in Warsaw - with the trend expected to continue into 2002, developers said.

They pointed to the construction this year alone of 212,500 square meters of modern retail and leisure space in the city, adding to the capital's existing 544,000 square meters.

"The current economic decline is being offset by the growing popularity of mall shopping," said Wiktor Rodziewicz, director of the Centrum Handlowe Targówek (CHT) mall in Warsaw.

As a result, Warsaw malls such as Promenada and CHT are able to expand their retail space to include more shops and entertainment to draw in customers. Forthcoming development projects such as Złote Tarasy by the Netherlands-based ING Development are still attracting Polish and international retailers to set up new stores. "I do not consider there to be any problems in filling schemes," said Mark Gamble, a retail agent at Anglo-Dutch real estate agency DTZ Zadelhoff Tie Leung. "Provided developers are flexible in terms of rent and leases and have a well-designed product ..."

In September, CHT completed an expansion boosting its number of shops from 60 to 135, and now has 22,000 square meters of retail space in addition to a 25,000 square-meter Carrefour hypermarket. Rodziewicz said the mall would also have a new multiplex cinema in spring 2002, but remained tight-lipped about the choice of operator as talks are still underway.

Netherlands-based retail developer ECC is to follow suit next year by expanding its Promenada mall in Warsaw. According to the mall's manager, Jarosław Zamojski, the company plans to double the facility's 47,000 square meters of retail space, which already contains a bowling alley and multiplex cinema, to include new shops and restaurants. Although the expansion will not be completed until the first quarter of 2003, Zamojski said he has already concluded a number of pre-lease deals.

"We would not have decided to expand if we weren't 100% certain that we can fill the center and make a profit," Zamojski said. "We have a niche as the only luxury shopping center in Warsaw and we dominate this part of the city." He added that the economic downturn is not adversely affecting the mall's 150 shops. "Nothing terrible is happening to them," Zamojski said. "Quite the opposite - they are being expanded, renovated and upgraded. Their owners are convinced that things will improve."

ING Development is confident that its 205,000 square-meter Złote Tarasy shopping, leisure and office complex behind Warszawa Centralna will be fully leased before its opening in 2005. "There is huge interest from tenants because there isn't a brand on the Polish market that wouldn't want to open their flagship stores in the center," said Jerzy Hańczewski, Złote Tarasy project manager. "We expect the center to be 100% leased on opening." ING Development is examining preliminary offers in its tender for a general contractor and work on the main part of the project will begin between March and April next year.

The growth of shopping centers in Warsaw is accompanied by retail development in Poland's biggest cities. According to Eli Egosi, director of Plaza Centers Poland South (PCPS), a subsidiary of Israeli retail developers Plaza Centers Europe, there is demand from retailers for malls that are not based around hypermarkets. The company, which owns the Sadyba Best Mall in Warsaw, plans to open as many as 40 malls in cities containing at least 100,000 inhabitants. Egosi said the two malls opened by the company this year showed no sign that the economic downturn was prompting retailers to shy away from new investment. PCPS let 96% of retail space in its 20,000 square-meter mall in Ruda Śląska in Silesia prior to its opening in November, while Kraków Plaza, the company's 60,000 square-meter flagship project, which will include Poland's second IMAX cinema, will open this month with 92% of its retail space filled. "This compares very well with other shopping centers we have around he world," Egosi said, adding that PCPS has plans to open another four centers next year in Łódź, Poznań, Radom and Elbląg.

Greg Goodale