Retail park sector continues to grow
Answering questions: Juliusz Wawrzyniak, President at Genesis Property which is one of the leaders on the Polish market of parks and other smaller retail facilities
Space in retail parks is mostly leased by chains whose offerings meet the daily needs of consumers. Retail parks remained open during the pandemic, and when the effects of the pandemic began to dim, the dynamic development of this asset class began, which is not hampered by the perturbations caused by the war in Ukraine. What is behind such a good condition of this sector?
During the pandemic, retail parks and convenience centers remained open and were the preferred places to shop. Therefore, their owners fared better than mall owners. Retail parks allow easy access to retail establishments, as most stores can be entered directly from the parking lot. There are no common areas. Security in such facilities is greater than in large shopping malls gathering many people in a confined space.
Retail parks and other small facilities also have quite a few additional advantages over large-scale shopping centers. Rents are lower, and thanks to their location, parks are more accessible and allow for quick purchases. Thanks to lower rents, we can prepare a unique offer and invite not only international brands, but also local entrepreneurs to join us, making these facilities regional, recognizable shopping centers covering even a few neighborhoods.
In addition, smaller facilities complement e-commerce, which will continue to grow, but will not, in my opinion, threaten the existence of this asset class. What’s more, some of the e-commerce retail chains are using their ground-level stores as pick-up points allowing customers to conveniently pick up goods ordered online. We have had and are getting signals from tenants that they want to be present in retail parks and increase their presence in the regions: there are many places in Poland that have been deprived of modern retail so far, and this applies to small and medium-sized cities, as well as the outskirts of large urban centers, where it is not uncommon to see new locations planned for single- and multi-family developments. Retail parks are ideal formats for such locations.
So can we say that the investment market for this asset class is healthy and strong?
With certainty. Genesis Property will soon put into operation five retail parks with a total leasable area of 31,400 sqm. They will be built in Ropczyce, Brzeziny, Rogozno, Gostyn and Żagań. Much of the space in these parks is already leased by both international brands and local entrepreneurs, and advanced talks are underway for the remaining vacant units. At the same time, we are already receiving signals from specialized funds investing in smaller retail formats indicating interest in these assets.
Also taking into account other investment parameters and consumer preferences, which are keen on the parks’ offerings, they are the most attractive and secure assets available in the commercial real estate market at the moment.
Did the pandemic and subsequent events in the economy reinforce trends that were already evident in the market?
Consumers have always been keen to take advantage of the well-tailored offerings of retail parks in local communities. They are flexible assets, much friendlier than large commercial facilities, and in many respects: they allow consumers to make the purchases they need, and they are also open to local entrepreneurs, who often cannot afford to pay high rents in shopping malls or do not fit into the owner’s commercialization strategy and have no place in such facilities. We are now seeing that even those major retail chains that until now were present only in the largest, core shopping malls located in the centers of large cities are preparing store formats that fit into local retail parks, and in my opinion this trend will intensify. Retail chains want to increase their market share, and one effective way to do this is to open stores as close as possible to customers’ homes in locations that have so far lacked modern retail offerings.
