High energy prices and rising inflation are affecting market conditions across Europe. According to economists' forecasts, the most difficult period will be the coming winter. However, Poland is in a more favourable situation despite rising inflationary pressures, as JLL experts argue in their latest report on the retail market in Poland for Q3 2022. According to Oxford Economics, Poland's GDP will grow by an average of 3.0% per year between 2022 and 2026, well above the average for the EU as a whole and the eurozone (1.8%). In addition, Poland is projected to see the greatest increase in retail spending until 2026. Oxford Economics also reports that retail sales, in real value terms, are expected to grow by 4.6% per annum until 2026, placing Poland among the top European countries.
- Total retail investment volume in the first nine months of 2022 exceeded €822 million, the highest level achieved in the first three quarters since 2019’s record €878 million.
- In Q3 2022, developers delivered 113,000 sqm GLA of modern retail space to the Polish market. The leader continues to be the retail park format, which accounted for 66% of new supply. 15% of this space was developed within two freestanding retail warehouses (DIY shops) with the remaining 19% in the form of convenience centres.
- The retail park segment saw eight new developments and an extension of one existing park, distributed evenly across cities of all sizes. The largest projects opening in Q3 2022 included: Aniołów Park, Częstochowa (GLA 17 500 sqm), Cuprum Park, Lubin (GLA 13 000 sqm) and Vendo Park, Otwock (GLA 9 200 sqm). The first two sites are excellent examples of the adaptation of space left over from closed Tesco shops.
- Almost 430,000 sqm of new space is under construction. More than half of this supply (205,000 sqm) is expected to hit the market in the last quarter of the year. Retail parks invariably remain the dominant format in terms of the share of space under construction (50%). In addition, the retail warehousing sector will expand by another 40,000 sqm in three new free-standing projects (Agata Furniture in Radom, Leroy Merlin in Warsaw and Kaufland in Rzeszów).
New brands, expansion and sustainability
"The outlook for the Polish retail market looks positive and is illustrated by the interest from new international chains entering the country. In the last quarter, the new fashion brand Uniqlo from Japan and the discount concept store Gudi Home, among others, made their debut in the Polish market. We also noted the strong development of brands already present, which are looking for expansion opportunities, such as Primark, which recently doubled the number of shops it has in Poland. The development of ESG measures is also noticeable - they are becoming an important part of many companies' planning and strategy. Some of the most common solutions in retail facilities include car chargers, more green space and the use of renewable energy sources. The recently opened Vendo Park in Skarżysko-Kamienna has met this need by installing photovoltaic panels right next to the building", notes Anna Wysocka, Head of Retail Agency, JLL.
Another example of pro-environmental activity on the part of developers and owners of retail facilities is the introduction of traffic improvements to facilitate access, movement and customer-friendly parking. Bicycle paths, bicycle parking racks, service points are just a few examples of facilities meeting the needs of consumers. The owners of the facilities also carry out educational activities, encouraging the use of such solutions.
The investment market is going from strength to strength
"In H1 2022, retail properties with a total value of more than €760 million changed ownership in 20 transactions, and a further seven properties gained new owners in Q3. The value of these contracts amounted to €62 million, although the average transaction volume is as much as €30 million - 48% below the average compared to pre-pandemic numbers. However, this is still significantly above the average for transactions in 2021. This indicates that investors are not only interested in retail parks, convenience centres, freestanding grocery and construction shops, but also in retail property portfolios and larger assets", adds Agnieszka Kołat, Head of Retail Investment, JLL.
The largest transaction in Q3 2022 was the sale of the 15,600 sqm Franowo Centre in Poznań. An undisclosed buyer paid €21 million for the shopping centre which has tenants such as Biedronka, Media Expert, Pepco along with a large office component.
A number of transactions in the retail sector are currently in the exclusivity phase with planned closing dates as late as 2022. With this in mind, last year's volume of around €1bn could be significantly exceeded.
