Metro asks for time on Wroclaw deal
German developer Metro's recent request for an extension on closing a land deal in Wroclaw has fueled speculation that the hypermarket is either pulling out of the local market or recasting its strategy in the face of competition from other mass retailers.
In January, Metro offered the city a record-breaking zl. 50.4 million ($12.6 million) to develop a retail center on a 17-hectare site on the outskirts of town. The ownership handover then stalled in the Interior Ministry, awaiting the seal of approval for land transfers to foreigners.
But after the ministry gave the nod this summer, Metro has twice failed to show up for official signing ceremonies at city hall and last week requested a three-week extension on the deal.
"That's the final deadline," said Andrzej Jaroch, deputy mayor of Wroclaw, about the latest Metro request.
While the extension has sparked rumors that Metro might be pulling out of the city altogether, others say the German developer is vying with hypermarkets, such as French Carrefour and German Hit, to get its hand on a better plot of land located closer to city center.
The city has not received any clear indication from the company of its intentions about pulling out of the deal, Jaroch said. Metro was not available to comment on either its plans or current speculation.
"Formally...they confirmed that they have the money in the account, that everything is ready but internal agreements don't permit them to sign yet," Jaroch said.
However, informally the word on the street and in city hall is that the company will ultimately resign from the site. "It can be said that there is a debate under way whether to resign or not," Jaroch said.
The company may have its eye on another site in the city. "Other offers for plots not in the hands of the city have appeared," Jaroch said. "The conversations I had with them did not indicate that there are other offers, that's just speculation at this point."
One prime site that has surfaced as a possible alternate for Metro is the former Polmies factory now in the hands of National Investment Fund "Octava" (Octava NFI). "The location in Wroclaw is great," said Iwona Kostrzewska-Whitney, owner of IK Development, a Wroclaw-based real estate company.
Another theory is that Metro got spooked by the avalanche of retail space that hit the Wroclaw market in the last year. Just this week, French developer Apsys opened a $65 million retail-recreation center on 10 hectares on the northern edge of the city. In addition, since Ikea opened up its Centrum Bielany site a year ago anchored by Tesco, Obi and Ikea, other large-scale retailers Sconto, Praktiker, Selgros, Castorama and Carrefour have jumped into the local market. Before year-end, LeClerc is due to open up its own site in the city.
Still, others question how much more potential the market has. "Now is an extremely interesting time in Wroclaw in the retail market," said Jerzy Hendrich, director of Commercial Property Services, a Wroclaw-based real estate consultancy. "This year and next year will be tests of how deep the pockets of the customers are and how much more money can be drawn from those pockets."
