Station synergy

The cooperation between retail developers and transport companies is thriving By Adam Zdrodowski Vienna and Warsaw Stock Exchange-listed developer and investor Immofinanz Group is expected to finalize its negotiations with Polish State Railways (PKP) regarding the redevelopment of the former Warszawa Główna railway station site in the Polish capital. The entities are planning a large-scale, mixed-use project that will combine transport, residential, office and retail functions, and is valued at approximately €700 million. Construction on the scheme is scheduled to commence within the next two to three years. The planned shopping center development is not the only new mall located near a railway or bus station which will be developed in Poland in the near future, with a number of other investments of this kind now under construction and in the pipeline across the country. Real estate market experts are saying that the number of new projects which combine retail and transport functions are, and will continue to be on the rise as such schemes help create synergy and are beneficial in both the private and the public sectors. [caption id="attachment_76987" align="alignright" width="348"] Warszawa Główna, Image: Immofinanz Group[/caption] Projects galore Since the beginning of this century, a number of large, well-known shopping center developments located next to and connected to railway and bus stations have already been completed in Warsaw and other major regional cities across Poland. One of the first investments of this kind in the country was Galeria Wileńska which was constructed in the Praga area of Warsaw in 2002. Four years later, Galeria Krakowska, located near the main railway station in Kraków, was opened for business. In 2013, investors TriGranit Development Corporation, Europa Capital and PKP completed the Poznań City Center project in downtown Poznań which provided 58,000 sqm of leasable retail space, located just next to the main railway station in the city. In the same year, the main railway station in Katowice was integrated into a new shopping center scheme called Galeria Katowicka. The development was completed by Neinver Polska, Meyer Bergman and PKP and delivered 48,000 sqm of GLA. The growing number of new shopping malls that are built next to, and incorporated into railway stations is mostly the result of the PKP policy of making railway areas available for development which the company has increasingly been implementing in recent years. “We are the manager of one of the largest land banks in Poland. We offer land which has huge potential and is in very good locations – both in large cities and in small urban centers,” said Jarosław Bator, member of the management board at PKP. The previously unused PKP sites are now being redeveloped, providing new residential, office and retail functions. At the beginning of this year, PKP established a dedicated entity called Xcity Investment that is designed to develop PKP owned land in cooperation with outside investors. Bator argued that the completed Poznań and Katowice investments testify to the considerable developer interest in the cooperation. He added that the total value of the ongoing and planned real estate projects that PKP is involved in is estimated at more than €8 billion. [negative]"schemes involving the integration of a shopping center with a railway station are usually very successful and beneficial for the developer, the station operator and the visitors of the complexes alike.[/negative] According to Renata Kusznierska, senior director, head of retail, CEE, at DTZ, the growing availability of  PKP-owned land and the rising significance of rail transport will lead to the development of new shopping centers integrated with railway stations in the coming years.  The schemes currently under construction include Galeria Metropolia in Gdańsk, a development which is located close to the Gdańsk Wrzeszcz railway station and will offer approximately 33,000 sqm of retail space next year. In Wrocław, the ongoing Wroclavia investment is expected to comprise 64,000 sqm of retail space connected to a bus station. Another shopping center project integrated with a bus station (Nowy Rynek, 24,400 sqm of leasable space) is under construction in Jelenia Góra. Also the ongoing Nowe Centrum Sopotu scheme in the  Tri-city will combine retail, office, hotel and transport functions, noted Agnieszka Luścińska, an analyst at the consultancy and research department of Colliers International. Luścińska pointed out that besides the Warszawa Główna development in Warsaw, planned developments of this kind also include an integrated transport center investment in Olsztyn which will comprise a railway station, a bus station and a shopping mall. The project will probably be developed by Retail Provider and PKP. Another integrated transport center scheme is being envisioned for Bydgoszcz. The developer-PKP cooperation can also be seen in smaller cities, Luścińska said. Earlier this year, Dekada Realty signed a cooperation agreement with Xcity Investment regarding the joint development of convenience shopping center projects integrated with new railway stations in Konin and Mińsk Mazowiecki. The planned Konin and Mińsk Mazowiecki schemes will comprise approximately 5,400 sqm and around 4,300 sqm of leasable retail space respectively. Construction on the developments is expected to begin in 2016 or in 2017 and take more than a year. [caption id="attachment_76985" align="alignleft" width="351"] Dekada Mińsk Mazowiecki courtesy of BOIG[/caption] Mutual benefits Shopping center projects developed in cooperation with PKP and bus operating companies have proved to be very attractive for retail developers as railway and bus stations are usually located on some of the best sites in a given city. “Historically, train stations were always built in the centers of cities, and the cities themselves grew around them,” said Jacek Wesołowski, country manager of development Poland at Immofinanz Group. He added that his company recognizes the potential of such locations. The locations in the immediate vicinity of railway stations are particularly appealing to developers as they provide so-called natural footfall, Wesołowski said. Other developers are voicing similar opinions. “Our experience shows that bus and railway stations are often the best retail locations in a city,” said Dekada Realty management board president Aleksander Walczak. Unfortunately, the sites are often neglected due to the financial problems of transport companies, he added. According to real estate market analysts, schemes involving the integration of a shopping center with a railway station are usually very successful and beneficial for the developer, the station operator and the visitors of the complexes alike. Compared to other retail initiatives, shopping centers developed close to railway stations distinguish themselves through their huge footfall, which translates into an increased turnover in stores and points of services located in them, Kusznierska said. On the one hand, the fact that the developments in question are located in the downtowns of cities ensures their prominent visibility. On the other hand, the railway and bus station components of those investments invariably provide additional footfall, generated by travelers. The Złote Tarasy shopping center in Warsaw, located just next to the Warszawa Centralna railway station, illustrates the trend nicely. Many of the visitors to the mall are people waiting for trains departing from the largest railway station in the Polish capital. Also from the perspective of PKP and bus operating companies, cooperation with a private partner is highly favorable in that the partnership results in the construction of new railway and bus stations or at least in the extensive refurbishment of existing facilities. Many of the railway and bus station buildings in Poland were built during communism and are currently in poor condition. By providing developers with the adjacent land, the managers of those buildings facilitate the thorough revitalization of their property. [negative]"Railway stations represent some of the main visiting cards of cities, their revitalization can contribute to the process of improving the public perception of cities and of building their prestige. Agnieszka Luścińska, analyst at Colliers International.[/negative] Due to their central location, these investments are usually also very important for the cities in which they are developed. It can be argued that Poznań City Center and Galeria Katowicka have already become new landmarks in those respective cities. “It is worth bearing in mind that railway stations represent some of the main visiting cards of cities,” Luścińska said. She added that their revitalization can contribute to the process of improving the public perception of cities and of building their prestige. While being very attractive to developers, investments combining retail and transport functions can also pose serious challenges resulting from the very fact that the sites on which they are developed are located close to railway infrastructure. “These include both technical issues, related to the development [of new structures] over railway tracks, and the lack of proper air rights regulations,” said Wioleta Wojtczak, a senior consultant at the research and consultancy department of Savills. According to Kusznierska, another major challenge is the appropriate interconnection of the shopping center and the railway station which will ensure that the visitors can smoothly move from one building to another and thus create synergy between them. In the opinion of Luścińska, synergy also needs to be reflected in the proper selection of tenants for the retail areas located in the shopping center and the railway station itself. “Thus, it is important that the tenant mixes in both locations harmonize with each other,” she said.