Prague - If we say, using an idiomatic expression, that shopping malls were growing in the past years like mushrooms after the rain, we must acknowledge that the mushroom season is over. The international real estate company Cushman & Wakefield says that shopping centres construction volume in Europe will reach its five-year low next year. And experts say that 2011 will see the lowest decline.
According to Cushman & Wakefield, the total of 3.1 million of square metres of shopping area was open all over Europe in the first half of 2009. This is an 18% decline compared to last year.
A more optimistic outlook is expected for the second half of the year when the year-on-year decline should ease to 5%, according to data about unfinished projects slated for completion this year.
One centre to open next year
In the Czech Republic, the situation is similar to that of Europe. "Construction of new shopping centres in the Czech Republic is on decline and this should last until 2011. Projects whose construction has not started yet will not likely open in 2010 and developers who are waiting to start their projects, will have a more difficult position when negotiating with future tenants," said Alexander Rafajlovic, head of the research department at Cushman & Wakefield in Prague.
Next year only one shopping centre is slated for completion in the Czech Republic - Prague's Galerie Harfa which will be located next to the O2 Arena in Prague 9. Its foundation stone will be laid next Wednesday.
The developer who is planning to build the new shopping facility with an area of 44,000 square metres does not fear low demand from contractors. "We have signed contracts for about 45% of the area so far. It was obvious during our negotiations that contractors were more careful than they would be two years ago, for example, but we had strong arguments to convince them," said Pavel Hajn Smidbersky of Lighthouse which is building Harfa.
The developer sees as an advantage the close vicinity of the O2 Arena, which in addition to sporting events hosts numerous culture events with high level of attendance. Smidbersky says other positive aspects include the location on a busy street, metro and train accessibility and untraditional roof design.
"The roof will feature a parking area and a playground with an ice rink and a petanque area. We're also hoping to see customers coming from the offices we are building in the neighbourhood," said Smidbersky.
But building a shopping centre in densely populated area does not always turn out successful as shows the Stodulky shopping centre which lost its main contractor, as well as low occupancy of Galerie Butovice.
Relying on expansion
Most developers rather than introducing new places to customers they aim to attract more shoppers to one place. The Brno-based Olympia shopping centre is among those following the trend.
Olympia will expand its area by more than 20,000 square metres by mid-October. "After the global crisis "was announced", everyone began to act as if it had really been the crisis. That was when we needed to fill out the remaining 30% of rental area. It was a battle but we ended up with 100% occupancy level which is very satisfying," said Ales Navratil, sales and marketing director of the centre.
Czech shopping centres will continue to expand next year only in smaller scale. The Forum Liberec will expand by more than 21,000 square metres, the Fashion Arena Praha by 7,200 m2 and the Avion Shopping Park Brno by 10,000 square metres.
Adapted by the Prague Daily Monitor.