Investors and clients are focusing on local shopping centers
Today, investors enter only those sectors that guarantee security, stability and see very good results regularly. In an increasingly difficult business environment, they decide to develop real estate, which nowadays is a popular asset. The most important thing is investment security. Apart from the warehouse segment, retail parks are experiencing their best period. Thanks to the local character and a solid group of tenants, the majority of which are the largest chain operators, retail parks provide investors with a stable profit.
The retail real estate sector is currently focusing on projects that respond to the needs of the local community. It is focused on the construction of smaller facilities, such as retail parks and convenience stores, located near residential complexes where the shopping traffic has been redirected. In the retail sector, we can now observe the biggest change in the investment structure – says Bartłomiej Zagrodnik, Managing Partner/CEO at Walter Herz.
The group of investors deciding to build retail parks is growing steadily, and companies specializing in this type of projects are intensifying their operations and announcing further projects in smaller towns. The biggest players are acquiring land and planning expansion. In some cases, in the five-year perspective, they want to double their investment portfolio – informs Bartłomiej Zagrodnik.
According to Walter Herz data, interest in commercial real estate increased significantly last year. The volume of investment transactions in this segment reached EUR 760 million. And only the first quarter of this year has brought the retail sector transactions worth almost EUR 700 million.
Bartłomiej Zagrodnik has no doubts that investments related to the construction of retail parks are now one of the best ways to strategically expand an investment portfolio or diversify a real estate portfolio for investors. – New retail parks are gradually filling the supply gap in all regions of the country. Profitability of projects encourages investing in them. Capitalization rates are up to 7 per cent, with full security of investments, which are ensured by long-term lease agreements concluded with network companies popular on the market. The boom in this segment is noticeable, for example, in special concepts prepared for local shopping centers by brands that want show their offer in them – notes Bartłomiej Zagrodnik.
The growing interest in properties from the retail sector is connected to the development of the expertise of Walter Herz’s Land Development department, dedicated to, among others, such properties. – Noticing the growing interest in Land Development services in the warehouse segment in 2021, we decided to extend our services also to developers and investors in the retail segment. Not only do we implement projects, but also put together analyses as well as secure and prepare land for this type of investment. We offer services related to the entire investment process, securing projects from the formal, administrative and technical side, as well as construction and commercialization, and real estate sale – informs Bartłomiej Zagrodnik.
According to Walter Herz, over 420 thousand sq m. of commercial space is being built in the country, most of which will become retail parks. The total stock of retail space in Poland amounts to 12.4 million sq m. of space, including about 2.1 million sq m. which is the backbone of retail parks and convenience centers.
Advisors predict further development of this segment. This is also supported by the forecasts for stationary retail, which, despite the rapid development of e-commerce, are encouraging. Euromonitor International reports that by 2026, stationary sales will increase by over 10 per cent.
The change in shopping habits means that we now mainly use retail and service facilities located in the vicinity of our place of residence. The popularity of local shopping centers stems from their convenient location for consumers. Quick shopping is also encouraged by the design of the facilities, which do not provide common areas, but practical, separate entrances to stores from the parking lot. It also supports sanitary safety.
About Walter Herz
Walter Herz company is a leading Polish entity operating in the commercial real estate sector across the country. For ten years, the company has provided comprehensive and strategic investment consulting services for tenants, investors, and real estate owners across the country. Walter Herz experts assist investors, property owners, and tenants. They provide full service to companies from the private and public sectors.
Walter Herz advisors support clients in finding and leasing space and provide consulting in implementing investment projects in the warehouse, office, retail, and hotel sectors.
The company is based in Warsaw and runs regional branches in Cracow and Łódź. Walter Herz has created the Tenant Academy, the first project in Poland, which supports and educates commercial tenants from all over Poland by organizing specialized training meetings. To ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.