According to JLL, 2015 was a year of consolidation for the Czech shopping centre market. During the year there was only one shopping centre opening and as such, it represented the second lowest supply level in the history of the market, following the record-low in 2011. Central Kladno, a city-centre scheme developed by Crestyl, opened in Kladno in early 2015.
Development activity will remain constrained in 2016, although there are a number of projects in the pipeline. The largest schemes planned for delivery in 2016 include Aupark Hradec Králové and Shopping Centre Přerov. Construction also commenced on the extension of Centrum Chodov in Prague, which should rank among the largest retail schemes in the country upon completion in 2017. The improved economic situation has also revived some outlet developments that were previously put on hold. The Prague Outlet, situated next to the Prague Airport, should open its first phase in 2016, another one in Ostrava is in a preparatory phase.
Tomáš Soukup, head of retail agency at JLL, commented: “The Czech Republic registered one of Europe’s highest economic growth rates in 2015. This has been positively reflected in consumer behaviour with increased retail sales, both in bricks and mortar stores and online. Despite the fact that the Czech retail market has achieved a high level of maturity, which leaves limited space for new development, there is still some potential for new retail schemes. The parameters of such new developments must however be carefully evaluated.”
Prague’s high street market has proven its unique position with a number of new market entries in 2015. The Golden Cross, Na Příkopě and Wenceslas Square have attracted Petit Bateau, Marc O’Polo and Barbour. Pařížská, which is home to luxury retailers, has witnessed the opening of a Tory Burch boutique last year and COS at the beginning of 2016. On the F&B side, Kusmi Tea Paris and Jeff de Bruges opened their first stores in the country in Nový Smíchov shopping centre, in Prague. For 2016, the Prague high street should witness more new market entries with Pinko and Breitling stores on Pařížská and British toy retailer Hamleys on Na Příkopě.
Blanka Vačkova, head of research at JLL, said: “Prague has developed into a world-recognized brand and as such it is a global tourist destination. Combined with increasing purchasing power, it makes the city very attractive to retailers who are considering entering new markets. More new brands to open on the Czech market will be connected with the opening of the second phase of Centrum Chodov in 2017. Among those already announced are Zara Home, Oysho and F&B operator Wagamama.”
As consumers demand more non-shopping amenities, shopping centre owners and managers are providing more space to restaurants, entertainment and leisure in order to increase dwelling time in their malls, as well as to offer a greater diversity of services. Therefore, more concepts such as gyms, saunas and children’s play zones are emerging, but shopping centres are also enlarging their food offer.
Kateřina Široká, senior retail consultant at JLL, said: “Due to high competition on the Czech market, landlords are constantly seeking ways to increase the quality and variety of services in their centres. It includes the remodelling and redevelopment of existing schemes, working with the tenant mix in order to attract new brands, enlarging the food offer, bringing additional leisure activities; and last but not least, by increasing comfort and convenience for their customers. These include for example creating changing rooms, providing free Wi-Fi, free stylist advice and hands-free shopping assistants.”
Shopping malls are starting to expand their role from ‘pure’ shopping to a broader experience, including community centres. Centrum Černý Most in Prague for example organises beach volleyball tournaments, Arkády Pankrác introduced a mountain bike race, ‘Arkády Ultimate Downmall,’ and Avion Shopping Park in Ostrava has set up a Blood Centre in co-operation with the Ostrava University Hospital.
Retail was the leading asset class over 2015 in the Czech Republic; it accounted for approximately €1.12bn or 42% of total transaction volumes – more than a three-fold increase on the previous year’s figure. The largest individual transaction was the sale of Palladium, Prague’s prime shopping centre, acquired by Union Investment for €570m. One of the trends observed in 2015 was a growing appetite for regional assets: Varyada in Karlovy Vary, Campus Square in Brno, Oáza Kladno, Futurum Kolín, OC Frýda and the Bluehouse Portfolio were all traded in 2015.
Stuart Jordan, head of investment for the Czech Republic and CEE at JLL, concluded: “Encouraging economic growth, high-quality modern stock, low levels of personal debt and growing per capita retail spend all combine to make the Czech retail sector highly attractive to domestic and international investors alike. Over 2015, a depth of interest was demonstrated for a variety of assets including Prague shopping centres, regional schemes, outlet centres and last but not least, high-street assets. This looks set to continue in 2016 with a sizeable pipeline and wealth of demand already taking shape as investors continue to acknowledge sector value.”
