New York is the world's priciest location for retail space
East 57th Street in New York tops the list of most expensive retail streets in the world at $7,535 per square meter a year, according to a report released last month by Healey & Baker and Cushman & Wakefield.
Second on the list is the Champs Elysees in Paris at $6,026 and Pitt Street Mall in Sydney at $4,803 per square meter a year. Warsaw's ulica Chmielna and ulica Nowy Swiat put Poland in 31st place out of the 44 countries ranked, with average retail rents at $960 per square meter a year.
Nowy Swiat dressed up of a festive evening.
Although research revealed a 60% increase in rent in the choicest retail locations from June 1999 to June this year, on average rents hiked just 3.2%. The report also unearthed some major regional disparities; Toronto saw its retail rents double while New York's skyrocketed by 40% in the same period. According to the report, North America and Europe lead the world in terms of rental growth due to their healthy economies and high levels of consumer confidence.
In addition, the report forecast that the retail sector will see the strongest rental growth this year above that of office and industrial property as demand for space in city centers, shopping malls and multifunctional retail and leisure complexes escalates.
As far as rents in Central and Eastern Europe are concerned, rates vary significantly. The report predicts minimal rental growth in Romania and Slovakia, and for rents in Russia to stabilize or even drop compared to last year. The Czech Republic, which experienced a minor upward rental trend in 2000, is expected to see steadily increasing growth over the coming months. Despite its increased economic activity, Poland, has fairly stable rents, according to the report. In addition, with a dearth of retail space in Warsaw as well as a burgeoning number of Varsovians moving to the suburbs and beyond, more retailers are looking to set up operations outside the capital.
GVA enters consultancy market
GVA Immoconsult Polska, the Polish branch of the Vienna-based GVA Immoconsult, began offering its consultancy services last week. The company is also part of GVA Worldwide, a $9 billion property association that has branches in 20 countries around the world and more than 12 million square meters of real estate under management. GVA Immoconsult is a subsidiary of Volskbanken, whose local portfolio includes the Ilmet office building; an office building on ulica Wspolna; Ochota Office Park buildings I, II, III; a retail center on plac Dominikanski i Wroclaw, and the City Center shopping mall in Radom investments totaling O110 million.
Immoconsult Polska will concentrate on brokering, consulting, research and financing commercial real estate. "We want to take a share in the Polish real estate market, which still offers a great deal of opportunities," said Jerzy Nemling, director of Immoconsult Polska. In addition to Warsaw, Nemling sees a chance for GVA in Krakow, Katowice and Wroclaw. According to Jerzy Wysocki, the president of Warsaw-based Knight Frank Nieruchomosci, the property market is already dominated by Western companies providing professional services. "The market will verify whether another real estate adviser will be needed," Wysocki said. He added that newcomers will have a tough task ahead of them, not only to promote their services, but to find a niche in the already crowded market.
Knight Frank unveils
property report
Knight Frank Nieruchomosci issued its annual "Property Report" for Poland at the beginning of December. According to the report, which covered Warsaw, Krakow, Poznan and Wroclaw, prime office yields in the capital are currently at 11-12%, but are expected to improve to 9-10% in a couple of years as seen in Prague and Budapest. By comparison, prime yields in Western European property markets are at 5-6%. The survey also indicated that venture capital funds are likely to begin investing in property, joining the fray of institutional investors, investment funds and insurance companies already doing so. In addition, Warsaw's supply of class-A office space increased by 150,000 square meters in the past year and now boasts a total stock of 580,000 square meters. That pace, though, is expected to be curbed by the end of 2001; 50,000 additional square meters will hit the market next year and another 180,000 by 2004.
Asking rents for class-A office buildings range from $27-$30 per square meter, but transactions usually result in discounts of 10-15%. Modern retail space grew by 120,000 square meters in 2000 and the total stock is now 660,000 square meters, of which 70% is in shopping centers. The latest multi-functional development, the Reform Centre on Aleje Jerozolimskie with a total space of 200,000 square meters, is scheduled for completion by the end of this month.
Knight Frank's research showed that within the next two years an additional 80,000 square meters of retail space will hit the market, as five new multi-functional developments are slated for construction. Warsaw will see the majority of that development.
In Krakow, class-A office stock is estimated at 26,000 square meters, with rent levels at $20-$23 per square meter. At just 9,500 square meters of space, Poznan is looking to boost its supply of office stock by building another 24,000 square meters by 2002. Asking rents in that city run to $26-$28 per square meter. Wroclaw has 14,000 square meters of class-A office stock but another 5,000 square meters are slated for completion by the end of this year. The total retail market in Krakow is estimated at 170,000-180,000 square meters, a figure that is expected to grow by another 150,000 square meters during the next two to three years. According to the report, Poznan's shopping centers cover 210,000-220,000 square meters of space but will increase by 24,000 square meters in two years. In terms of retail space, Wroclaw ranks second after Warsaw with 233,000 square meters in shopping centers and retail chain developments. Investment under construction should add 190,000 square meters by the end of 2002.
