Last week, Cushman & Wakefield released the annual report on the main retail streets across the globe. The analysts also presented 12 main Polish streets including Katowice’s 3 Maja St. katowicethecity.com asked Tomasz Górski, senior negotiator from the retail department at Cushman & Wakefield, about the current trends and the influence of Galeria Katowicka’s opening on the future of 3 Maja.
In 2007, 3 Maja St. was at the list of top 10 localizations with the strongest rental growth in Europe (+34,3%). Additionally, the street reached 38,3% annual rental growth rate in 2008, which was the best result for the country. That time 3 Maja was ranked fourth most expensive street in Poland when the annual rent reached EUR 780 sq.m/year. In 2010, the rent was only EUR 717 sq.m/year, and in the years 2011 and 2012 – EUR 696. Today, it is even lower and amounts to EUR 672 sq.m/year. This is over EUR 100 decline in rents in five years. What is the reason of the falling rates? (to compare, Warsaw’s Nowy Świat St. and Floriańska St. in Kraków saw a slightly increase of rents in the period of five years)
– Nowy Świat and Floriańska are stronger retail locations characterized by the higher rental level five years ago and that is why the streets less suffered from the correction of rents in the 5-years period. In connection with the overall economic situation, in recent years we have observed the rents were slightly falling on the main streets or remained stable at best in most cases. Moreover, streets like Floriańska defend against larger rental declines for its mixed characteristic – it also benefits from the touristic traffic.
Will the opening of Galeria Katowicka and the modernization of 3 Maja, which is going to be concluded this year, affect the rental growth on the street? The official address of Galeria Katowicka is ul. 3 Maja 30. Will the rents being paid by tenants of the mall be taken into account while collecting data of retail rents on 3 Maja?
– Generally, the opening of Galeria Katowicka and the renewal of the Railway Station will positively influence the rental rates in the center of Katowice in the long term perspective. The rents of Galeria Katowicka will not be included in the statistics of 3 Maja with the exception of retail units which are accessible only from outside the mall.
How will the opening of Galeria Katowicka affect the retail sector in the center of the City? The more probable scenario is the expansion of retail in the area and the improvement of surrounding properties or the centralization of the retail in the mall and the shrinkage of trade as well as the number and quality of retail units on 3 Maja and other streets around?
– The experience showed that the location of a shopping mall in a city center positively affects immediate surroundings. It makes the location to become „stronger” within the range of trade. Owners of neighbouring tenements invest to refit and improve their properties as they have to offer to potential tenants similar retail conditions comparable to the shopping mall. Also city hall’s representatives are more willing to repair the infrastructure.
As a matter of course, the opening of the shopping center of this size has to involve changes on the street – some of the tenants will decide to move into the mall and close shops on 3 Maja. However, in the long term perspective, the abandoned units will be replaced by new tenants who are not able to rent retail spaces in the mall for many reasons. That is why the whole City center will benefit from the situation.