A walk in the park

Jacek Wesołowski, managing director, Trei Real Estate Poland: Last year was a very intense time for us, as was reflected in the increased rate of our activities in Poland. During this time, we opened five Vendo parks: in Bytów, Ostrołęka, Pułtusk, Łask and Kobyłka, with more than 18,000 sqm of leasable space, combined. We designated EUR 25 mln to new projects, thus almost doubling our investment level compared to 2018. We also expanded our Polish portfolio of land for future retail projects.

What was particularly important for you?

Extending our operations into the residential sector was an important step for Trei. We bought a residential project in Wrocław and are now adding to this and selling the units. We will definitely develop in this direction over the next few years.

How do you rate the interest from tenants in retail parks?

Tenants’ interest in small retail formats is very strong, which is confirmed by the fact that we often manage to lease our buildings before they are completed. The good contacts we have with tenants resulted in the signing of around 40 lease agreements in Vendo parks in 2019. Interestingly, more and more retail segments, such as clothing, are becoming interested in retail parks. Last year our parks were entered by a number of brands that had previously only been present in large shopping centres, including Empik, Smyk and Sinsay, and we are now hearing about other chains that are also considering such a step.



Vendo Park Mnichovo Hradiště is to open this year 80 km northeast of Prague

What are the prospects like for the further development of retail parks in Poland?

The strong interest from tenants clearly shows that the demand for retail space in small formats will not weaken in the near future – on the contrary, it’s likely to grow further. More and more brands are seeing the benefits of running their businesses in small retail buildings, including factors such as the lower rental and servicing costs compared to shopping centres.

What are your goals for 2020?

We have a busy start to this year. We currently have four Vendo parks under construction: in Płock, Jawor, Częstochowa and Solec Kujawski, which we plan to open together with three other parks in 2020 – so that’s seven openings altogether, and we have nineteen other projects in the planning, design and construction phases.

You once said that you would build 50 parks, but recently you have even been talking about 80. When are they to be completed and will the market be able to absorb such a large number?

Poland’s potential is huge. We have a stable economy, and at the same time we are still able to identify many ‘white spots’ on the country’s map, where the range of retail is still under-developed and small formats such as retail parks could be located. I’m talking about the outskirts of towns with fewer than 30,000 inhabitants, because they are currently in the sights of investors, ourselves included. Furthermore, the increasing affluence of Polish society and its changing consumer habits, including the need to shop close to home, have created a very healthy environment for the construction of retail parks. We initially envisaged the construction of 40 Vendo parks in Poland at Trei, but now we are thinking more along the lines of a portfolio of 80 centres, assuming the completion of seven projects a year. The market forecasts are optimistic. The biggest barrier is still that the present regulations can be interpretted in many ways, which might turn out to be an obstacle to accessing investment areas and that could slow down the pace of development

But the competition has also been growing on the retail park market...

But we can say with some confidence that we are enjoying a golden age for this format at present. It’s been forecast that retail will move into smaller and smaller towns, with as few as 10,000 inhabitants or fewer. The growing number of tenants, the higher turnover of stores and the availability of land as well as the low costs of running retail parks will only encourage further expansion. Many investors have taken note of the success of this type of format and successful projects are being developed, such as those built by Napollo. The competition in the retail park market also includes local businesses assisted by ‘fee developers’.