Further Growth Expected In Shopping Centre Space
22 May, 2006, Prague
By the end of next year 13 new shopping centres are to appear in the Czech Republic. Overall, commercial space will be extended by up to 306,000 sq m in 2006 and 2007. There was a total of 1,348,000 sq m of floor area in modern shopping centres in the Czech Republic at the end of 2005.
The Czech Republic follows the European trends and will soon approach the average of the European Union (E-25) according to the Shopping Centres Development report published by Cushman & Wakefield, the world’s leading real estate consultancy.
“At the end of last year there were 132 sq m of shopping space per thousand population in the Czech Republic, while the European average was 171 sq m per thousand pop. People continue to be interested in shopping, and retailers continue to be interested in selling. The planned development is a natural response to the market’s demands,” says Martin Žížala, head of the retail team at Cushman & Wakefield’s Prague office.
“To date this year, the new NovoPlaza shopping centre on Novodvorská Street in Praha 4 and the third stage of the Obchodní centrum Letňany shopping centre have been opened. Thanks to these, the current (May 2006) Czech average is 139 sq m of modern shopping space per thousand pop. Before the end of this year we expect the opening of the Šestka centre in Praha 6. Refurbishment is planned for Prior in Ostrava while a new shopping centre, Mercury Centre, is being built in České Budějovice,” says Karel Zeman, head of research at Cushman & Wakefield.
The largest amount of shopping space in central Europe will be developed in Poland, approximately 1,140,000 sq m in 2006 and 2007. Slovaks plan the construction of 250,000 sq m and Hungarians 142,000 sq m.
Also western European countries, the United Kingdom, Italy, Spain and France, are planning massive development, more than one million square metres. However, the greatest expansion is expected in Russia, 1,860,000 sq m. Overall, shopping space in Europe will grow by more than 15 million sq m by the end of 2007.
At the end of 2005 the floor area in all European shopping centres totalled 90 million square metres. Last year alone, 177 brand new shopping centres were built and opened, and another 59 shopping centres were extended to include new areas. Cushman & Wakefield experts expect that modern retail space in shopping centres in Europe will hit the mark of 100 million square metres by the end of 2007.
Despite the considerable interest in renting retail space in Czech shopping centres, the country’s level of rental is one of the lowest in the whole of Europe. The rental per square metre in a 100 – 200 sq m unit in a shopping centre located outside the centre of Prague usually amounts to €400 to 600 a year. The most expensive retail space is in the United Kingdom, where rentals amount up to €2,500 to 2,800 per square metre a year.
“These figures are indicative only; it always depends on the situation of each particular shopping centre, the location of the specific unit in the centre, its size, etc. Rentals in regional shopping centres are usually lower than those in, say, large cities,” explains Martin Žížala of C&W.
“Absolutely crucial for a shopping centre’s success is its location – a densely populated zone with excellent accessibility by both public and private transport, with car parking facilities. The right mix of retailers also plays an important role. Developers try to make the offer attractive, and therefore the entertainment segment has become a common part of shopping centres over the past few years,” notes Karel Zeman.
“The shopping centre’s success then reflects, naturally, the rental levels and retailers’ demand for leasing units. Well-established centres have long been experiencing demand for retail space in excess of the offer. The only chance to obtain a unit is then to wait for some of the current tenants to vacate their units, or the developer decides to extend the centre by including additional retail space,” adds Martin Žížala.
In 2007 ten shopping centres are to open in the Czech Republic; Palladium in the centre of Prague will be the largest of them. New construction of smaller local centres is currently under way; they will complement the offering of large retail complexes. For example, the Most City Centre in Most, Bondy Centrum in Mladá Boleslav, and Palace Pardubice in Pardubice, and Galerie Fénix and Centrum Palmovka in Prague are to be completed in 2007.
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