Poland’s total retail stock topped 15 million sqm at the end of Q3 2019. The high shopping centre density rate in the country’s large cities has shifted developer interest towards less saturated markets of smaller cities and other retail formats such as mixed-use schemes, according to Cushman & Wakefield’s Q3 2019 retail report.
By the end of Q3 2019, new retail supply had come to approximately 45,000 sqm and included two completions: the 25,000 sqm Stara Ujeżdżalnia shopping centre in Jarosław and the 5,300 sqm N-Park retail park in Wrocław. The remaining supply comprised the extensions of existing shopping centres such as Centrum Janki, Galeria Słowiańska in Zgorzelec, and Galeria Głowno in Łódzkie voivodeship. In addition, approximately 20,000 sqm was delivered through convenience schemes sized below 5,000 sqm, including Atut Bełchatów, Vendo Parks in Pułtusk and Ostrołęka, and a shopping centre in Młodzianowska Street in Radom.
More than 100,000 sqm of retail space is under construction and scheduled to open by the end of 2019, with this year’s total retail space supply expected to top 400,000 sqm. Some retail schemes are being remodelled or upgraded while others are already downsizing or planning to downsize hypermarkets in order to expand retail floorspace, to bring a smaller food operator (e.g. Tesco KEN Warsaw and Galeria Miodowa in Kluczbork), or to replace a food operator with a DIY retailer (e.g. Tesco Gdynia or Tesco Bydgoszcz).
Newcomers to the Polish retail market in the third quarter of 2019 included Korean LG Brand Store, a Dutch fashion retailer 100Days Amsterdam, which opened its store in Warsaw’s Klif shopping centre, a Spanish fashion retailer La’Mona in Pasaż Łódzki, Monki – a clothing brand of the H&M Group in Bonarka in Krakow, and two Italian fashion retailers: Corneliani and Fabiana Filippi in the Ethos building in Warsaw. Meanwhile, fashion brands Cubus and Forever 21 decided to withdraw from the Polish market.
Prime shopping centre rents remain flat. Warsaw retains the top spot with prime rents for a 100 sqm unit in its best-in-class shopping centres at €100-130/sqm/month. Rents are lower on other markets at €35-50/sqm/month. Meanwhile, secondary shopping centres with a limited retail offer or in less successful locations are experiencing increasing downward pressure on rents.
“Tenants are increasingly securing lease agreements with turnover based rents. They also expect lease incentives such as rent-free periods, shorter lease terms, fit-out contributions or a freeze on service charges. Going forward, market polarisation will widen, leading to marked differences in average rental rates,” says report author Małgorzata Dziubińska, Associate Director, Research and Consulting, Cushman & Wakefield.
Looking ahead, the Polish market will witness further growth in multichannel retailing, with e-retailers opening traditional stores and large retail chains streamlining and enhancing their online presence.
“A stronger sense of security, free deliveries and continuous customer service improvements have driven the growth of e-commerce in Poland. Online shopping is favoured for its convenience, a wide choice of products and very often for competitive prices. Electronics, household goods, clothing and footwear are the top categories of products Polish shoppers most often buy online. The biggest challenge in the fresh produce segment is to ensure transport and shortest delivery times to maintain food freshness,” adds Małgorzata Dziubińska.
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