News

The number of locations suitable for building a shopping centre is shrinking

In 2014, approximately 125,000 sq m of retail space is expected to be built in the Czech Republic which represents a 35% decrease when compared to last year’s volume. Since the beginning of the year, already more than 60,000 sq m or retail space was opened to the public. For the remainder of the year, we expect an additional ca. 25,000 sq m of new shopping centres and 40,000 sq m in retail parks to be delivered to the Czech retail market.

The biggest projects completed in the first half of 2014 were: Dandreet’s Galerie Teplice with approximately 22,000 sq m, Centrum Pivovar in Děčín (17,500 sq m) and OC Lužiny in Prague (16,000 sq m). The major schemes to be opened during the remainder of 2014 are: CTP Retail Park Brno (35,000 sq m), Galerie Frýdek-Místek (14,800 sq m) by TK Development and CPI’s Quadrio (8,500 sq m).

New additions have also appeared or, are about to be delivered to Prague’s city centre. Along the high street, the remodelling of City Palais with anchor tenant Julius Meinl and the refurbishment of Na Příkopě 14, which is waiting for its first tenants, has been recently completed. On top of this, CPI’s mix-used project, Quadrio, situated at Vladislavova/Spálená, is expected to add an additional ca. 8,500 sq m of retail space to Prague’s city centre. As the city centre is perceived by retailers as an attractive location, several new projects are planned there including “The Cross”  between Na Příkopě and Václavské náměstí. Developer activity in Prague’s city centre reflects the high interest from retailers in the retail space here,” comments Sylvie Samadi, Head of Retail Agency at JLL.

“The number of cities and locations with low saturation and good purchasing power of its inhabitants, where it still makes sense to build a new shopping centre, is shrinking. However, there are still a few. In Prague for example, it would be the Smíchov and Bubny sites and in Brno, it would be the north western part of the city,” explains Head of Research at JLL, Ondřej Novotný.

Demand

The Czech Republic remains the second most sought after market in CEE after Poland. It registers a healthy retail demand which is focused on Prague, its high street and the best performing shopping centres with a proven track record. “The steady inflow of new brands have enabled leading shopping centres in Prague to refresh and upgrade their tenant mixes and secure new comers such as: La Martina, Superdry, Kiehl´s Since 1851, to mention a few. However, we have also had a few leavers in the last 12 months such as Charles Voegele, Kapp Ahl, Jackpot Cottonfield, I-blues, Tie Rack and Mixer,” adds Sylvie Samadi.

Retail demand for Retail Parks, on the other hand, is mostly sustained by retailers that are well established on the Czech market. Discounters, food stores, electronics, sports, DIY, and drogeries are feeding the demand. No major new comers have entered the Czech market recently, with landlords having to rely mostly on the retailers already operating on the market.        

Rents

Prime shopping centre rents in Prague remain at a level of €95 sq m / month (for a 100 sq m unit). Prime High street rents in Prague are stable at a level of €180 sq m / month. However, demand levels, combined with an undersupply of suitable space, are in favour of a rental increase.