The Czechs are obsessed with consumerism, and shopping centres will therefore be a great business – this is a several-year-old vision of developers who, at the time of economic growth, began building shopping centres all over the country.
Now the economy is slowing down, people have become more cautious in spending their money and still 254,000 square meters of retail space will have been built by the end of the year, the biggest yearly growth in the Czech Republic’s history.
More than half of this year’s newly created shopping space, 130,000 square meters, are part of the four shopping centres and three shopping parks, which will have been opened between the end of October till the end of November. These are Arkády Pankrác in Prague, Nisa centre in Liberec, City Park Jihlava, AFI Palace Pardubice, and CPI Retail Parks in Příbram, Prostějov and Český Těšín.
“I think these projects can be successful. But the success will not come by itself. It holds true in retail, more than in any other developer segment, that not everything that is built is also successfully sold or rented,” said Filip Endal, an analyst with Deloitte.
Shops are fully rented
The retail space in the six above-mentioned projects has been fully leased. Ninety-eight percent of shopping space in AFI Palace Pardubice has been rented.
“Shopping space in projects of big European developers is usually fully leased by the opening day,” said John Strachan, head of retail with Cushman & Wakefield. However, he also noted that the global economic crisis has been limiting many retailers who are then forced to ask for various exemptions, such as an exemption from paying rent for a certain period of time. “Real estate owners should be prudent in these cases, as it may happen that some spaces in shopping centres and retail parks will remain empty,” Strachan said.
Ondřej Novotný, an analyst with the consultancy King Sturge, sees the situation similarly.
“The economy has been slowing down and there is less money among people. Some projects can therefore have problems with the lease of retail space, although no problems have appeared thanks to retail chains. Brands still fight for market share and they often rent retail space in shopping centres outside the capital only to prevent their rivals from renting the space themselves. I think they are going to be much stricter about their expansion next year,” Novotný said.
Multiplex cinemas join shops
Arkády Pankrác, the biggest of the new shopping centres, will be opened by developers Unibail Rodamco and ECE Projektmanagement in Prague this Friday. The area of 45,000 square meters will include 140 shops, cafés, restaurants, as well as 1,100 parking spaces. Construction costs have exceeded CZK 2.7 billion.
The developer ING Real Estate Development has more than doubled the area of the Nisa centre in Liberec from the original 23,000 square meters to 50,000 square meters. Since 30 October, 160 shops, a multiplex with eight cinemas, restaurants and cafés have been opened. In the car park there is a space for 1,800 cars. The expansion costs have reached CZK 1.8 billion.
Following several delays, AFI Europe will open a multipurpose AFI Palace Pardubice in Pardubice, on 25 November. There will be a hundred of shops, a multiplex cinema, restaurants and cafés on the area of 20,000 square meters.
The investor CEI Building and developer PSJ Invest’s project City Park has been opened since 25 October in Jihlava. Some 114 shops, a hypermarket, five cafés and a multiplex cinema spread on the area of 26,000 square meters. The construction costs have reached CZK 1.35 billion.
At the end of the year, there will be 1.9 million square meters of shopping centres. That accounts for 183 square meters per 1000 inhabitants. That is more than the EU average (166), more than in Germany (143), Italy (138), or Belgium (88), but less than in Austria (270), Sweden (333), or Norway (788).
Translated with permission by the Prague Daily Monitor.