It will exceed the average sizes of retail parks six times over
Developers planned the construction of 24 retail parks in the Czech Republic last year. In reality, though, only eight of these were actually opened, with the total stock at just over over 32,000 square metres. Implementation of the remaining ones has been postponed until later, and/or indefinitely. Last year, the trend of higher efficiency in floor space utilisation prevailed. An recent analysis produced by Cushman & Wakefield shows that new parks have predominantly been added to towns with some thirty thousand inhabitants, on average.
“This year developers intend to open another 45 retail parks with a total stock of over 200,000 sq. m. Last year’s experiences have, however, taught us that in fact we can only count on approximately a third of these projects being delivered as certain. The trend will particularly focus on expanding existing prosperous parks, while some minor projects will be developed in towns with thirty thousand inhabitants, on average. Opportunities for new developments still exist in places such as the towns of Jihlava, Zlín, Teplice and Karlovy Vary”, says Jiri Kristek, Head, Retail Park Lease Team at Cushman & Wakefield.
Overall, the Czech Republic currently operates approximately 690,000 square metres of stock in retail parks. Of this, less than seven percent is available for lease at the end of last year (vacancy 6.6 per cent). Therefore, occupiers may choose from some 45,000 sq.m. of available stock. (Statistics, nevertheless, only include units designated for lease rather than stores developed by retail chains for their own purposes. In addition to this, statistics do not calculate stand alone units selling furniture, foodstuffs, and DIY stores.)
“One significant trend which we have observed over the past few years is the pressure on efficient utilisation of leased premises. Last year, occupiers consistently analysed the potential of their future expansion plans, prepared themselves well for negotiations regarding their current conditions of leases, and some did not conceal their intentions to reduce the sizes of their retail shops. This trend has been reflected in the decline of the average size of leased stores – commencing in December 2011, the average store size dropped year-on-year from 714 sq. m. down to 707 sq. m.”, says Jiri Kristek.
“Maximising utilisation of their floor spaces has been particularly sought by occupiers in the electrical appliances sector. However, we have encountered efforts aimed at achieving more efficient sales also among stores dealing in furniture, household utensils, and some other goods”, Mr Kristek adds.
We observed a relatively major movement in the segment of sport goods chains last year. The Austrian Gigasport exited the market to be immediately replaced by a new chain, ‘Sportsdirect’, from the United Kingdom. Decathlon also has announced plans to open five new stores this year. Some operators are also pursuing plans to expand their existing stores by adding new concepts, such as – for example – ‘Hard Sport’, which belongs to the ‘Sportisimo’ brand.
The latest trends also include Internet shops that have been opening ‘brick-and-mortar’ stores in retail parks. They usually operate exclusively as delivery outlets; however, some retailers even develop them as fully-fledged retail outlets”, says Jiri Kristek.
Prague versus the Regions
At the end of last year the densest network of retail parks applied to the Olomoucký Region (101 sq. m. per 1,000 inhabitants). At the same time, the nationwide growth rate equalled 67 sq. m. per 1,000 inhabitants. If all of the plans published by developers today were to become a reality, the Vysočina Region would have been the place with the densest network of retail parks by the end of this year. This is also due to a development project involving a brand new park under the name of ‘Aventin Jihlava’, to be built by the developer, Aventin, over an area of 25,000 sq. m. It will be the largest retail park outside of Prague.
However, Prague would have become the place with the lowest density of retail parks at the end of this year.
“This year, a similar levels of development recorded in 2012 can be expected. All occupiers will make cautious considerations about their concepts and will keep adjusting them to reflect their current economic performances. With regard to the developers, they are going to have to fight for each single occupier who will be able to choose from both existing projects as well as planned developments. Any new developments will be affected by the number of the pre-lease agreements”, Jiri Kristek concludes.