New retail supply amounted to approximately 420,000 sqm in 2018, pushing Poland’s total retail stock up by 3% to 14.7 million sqm. Nearly 30% of the new supply was completed in small-scale shopping centres and retail parks (sized below 20,000 sqm). Extensions of existing shopping centres and retail parks delivered approximately 60,000 sqm of new retail space. Cushman & Wakefield presented a summary of the Polish retail market in 2018.
Key findings:
- Investment activity on the Polish retail market hit a record high of €2.5 billion, the highest since 2006.
- Shopping centre yields hardened to 4.25% while yields on prime high streets, retail parks and retail warehouses remained at 5%, 6.75% and 7% respectively.
- More than 420,000 sqm of retail space was delivered to the Polish market in 2018 – most of which (270,000 sqm) in shopping centres.
- By the end of 2019, new supply is expected to reach more than 400,000 sqm, the largest shopping centre under construction being Galeria Młociny in Warsaw (70,000 sqm).
“In 2018, over €7.2 billion was invested in the Polish commercial real estate market with €2.5 billion transacted in the retail sector. Last year’s retail investment volume was the highest since 2006 with a substantial contribution from the largest retail transaction in Poland: the disposal of a portfolio of 28 assets by Apollo Rida/AXA/ARES to Chariot Top Group for approx. €1 billion.
In Q4 2018, the retail investment volume exceeded €360 million, accounting for 16% of the quarterly volume (€ 2.2 billion). The last quarter’s volume was largely generated by the sale of Wars Sawa Junior, a prime high street retail complex, acquired for €301.5 million by Atrium European Real Estate. Transactions involving smaller assets, mainly retail parks, made up the remaining part of the retail volume.
Prime shopping centre yields hardened to 4.25%. While prime high street locations are valued at 5%, prime yields for retail parks as well as retail warehouses hold firm, at 6.75% and 7% respectively,” says Aleksandra Sierocińska, Consultant, Capital Markets at Cushman & Wakefield.
Shopping centres continue to dominate the Polish retail market, accounting for nearly 75% of the country’s total retail stock. At the end of 2018, Poland had 460 shopping centres totalling almost 11 million sqm of floorspace. More than 270,000 sqm was delivered in this format last year. Of that total, 85% was completed in 12 new shopping centres while the remaining portion of the new supply came onto the market through extensions of existing schemes.
“More than 360,000 sqm of retail space was opened across 27 new projects of all formats in 2018; twelve schemes were completed in small cities and towns with a population of less than 100,000. Compared to medium-sized and large cities, these locations benefit from lower retail space density ratios, weaker competition from existing retail schemes and a high purchasing potential of local residents. In addition, approximately 60,000 sqm was delivered through extensions of existing shopping centres and retail parks,” says summary author Małgorzata Dziubińska, Associate Director, Consulting and Research, Cushman & Wakefield
Poland’s largest agglomerations saw ten new retail schemes completed in 2018, including four medium-sized or large shopping and entertainment centres (Forum Gdańsk, 62,000 sqm; Galeria Libero in Katowice, 45,000 sqm; Gemini Park Tychy, 36,600 sqm; and Nowa Stacja Pruszków, 27,000 sqm).
“In upcoming years, Poland’s new retail supply will comprise largely small convenience and mixed-use schemes and retail parks. Smaller cities still have strong growth potential, but large-scale shopping centre density is, in my opinion, adequate in big cities. Galeria Młociny, which is scheduled for opening soon, will be one of few shopping centres coming onto the market,” adds Anna Oberc, Associate, Operational Director, Retail Agency at Cushman & Wakefield.
More than 600,000 sqm of retail space is currently under construction or has a valid building permit. Nearly 75% of that total is expected to be handed over by year-end 2019. The largest retail scheme underway is Warsaw’s Galeria Młociny (more than 70,000 sqm), which is scheduled for delivery in April 2019.
