Shopping is not just about making a purchase anymore, it’s about visiting a destination and enjoying a unique experience. Physical retail is very much alive – but it is undergoing a significant and rapid evolution. People will continue to shop in the traditional sense, but there is no doubt that parts of the European retail market will face growing challenges.
Strong Economic and Tourism Growth
The Central & Eastern Europe retail market is almost established and strong economic growth in the largest economies supports sustained demand for retail space. Markets are benefiting from strong occupier demand fuelled by robust GDP growth, increased consumer purchasing power and continued sales growth. Strong economic growth has resulted in a positive compound annual growth rate (CAGR) for retail sales in CEE, which we expect to be at 13% for CEE within the next five years, while the average growth in Western Europe will be less than half of that.
Tourism has also seen a strong growth in the recent years in Central & Eastern Europe. While Prague still dominates the tourism market, other CEE capitals are also on the rise. Prague’s total nights spent by tourists are already attacking 19 million
Czech Republic Remains the Most Attractive Country for Retailers
Positive economic development attracts many new brands into the region. The greatest number of newly coming brands is in the fashion sector, but the F&B sector is gaining in importance. Most of the retail brands tapping the market are coming from Italy, followed by United States, Germany, France and the United Kingdom.
The number of the new coming brands remains the same, as does their strategy for tapping the markets. Czech Republic and Poland remain the principal gateway, as they offer a very cosmopolitan environment and an excellent ratio of international tourists to local customers. In these markets, brands can foresee their success very well.
Development Opportunities to Set Focus on
Retailers have a choice of many unique leasing opportunities to choose from. Prime High Street is thriving in Prague (Czech Republic) and Budapest (Hungary), while other CEE countries rely on the power of shopping centers. There are three main multi-use developments retailers should set focus on. Savarin in Prague (Czech Republic), Elektrownia Powiśle in Warsaw (Poland) and Eurovea in Bratislava (Slovakia).
Savarin is the extension of the Prague’s High Street and will become one of the most important mixed-use development in prime city centre in whole CEE. Savarin will offer 39,000 sq m of retail space in an area visited by over 150,000 people per day. Savarin is set to open in 2022/2023.
Elektrownia Powiśle is an ongoing redevelopment of 54,000 sq m of mixed-use space in Warsaw. Elektrownia Powiśle will offer a mix of office space, a boutique hotel, apartments and 15,500 sq m of retail area in a very attractive location with charismatic feel. Elektrownia Powiśle will open in Spring 2020.
Eurovea is a mixed-use project in Bratislava, Slovakia. Current shopping center of 59,200 sq m is getting extended to the total of 85,000 sq m and is set to become become the most important shopping & leisure destination in Slovakia in 2022.
Even in such favourable circumstances, it is advisable to rely on a strong partner with deep knowledge of the local markets, years of experience and expertise in the retail sector, broad network of contacts all over the region and a proven track record of past successful transactions. Our professional team at Cushman & Wakefield can provide such qualities and a range of retail advisory services.