The beginning of 2022 has brought changes to the local and global economic picture, which have also affected the behaviour of Polish consumers and Poland’s retail market. This has resulted in a further increase in the popularity of necessities and the continued popularity of convenience centres. However, retail growth is recorded by all formats including shopping centres, which augurs well for the rest of the year, reports the latest JLL report Retail Market in Poland – Q1 2022.
Significant increase in sales
“Changes in the Polish and global economic and social situation have also been reflected in consumer behaviour. With rising inflation and the development of hostilities in Ukraine, we have seen more interest in basic products and more inexpensive shopping options. Consequently, outlets are gaining in popularity, while discounters and value retailers are also seeing good sales performances,” says Anna Wysocka, Head of Retail Leasing at JLL. “On the other hand, despite the challenging conditions, retail sales recorded significant growth, with the Polish market continuing to attract interest from international brands,” she adds. This interest from international brands is illustrated by the launch of the first Philipp Plein shop in Poland, opened in Warsaw, and Adidas’ announcement regarding the opening of a flagship store in Wars Sawa Junior.
Q-commerce, dark shops and eco formats
Trends in the grocery segment not only concern outlet zones in supermarkets such as the Carrefour chain. Solutions which support self-service shopping and quick-commerce with home delivery have also gained traction. These trends include concepts such as Żabka Nano, which is an unstaffed shop-in-shop that is supported by artificial intelligence, as well as the brand's testing of Żabka’s dark store brand, Delio. “This is certainly a very promising direction, as Polish consumers are extremely open to such solutions. ARC Market Opinions research shows that 88% of Poles could shop in fully self-service shops, and 64% declare interest in grocery delivery within 15 minutes,” concludes Anna Wysocka.
The eco-trend also continues to be popular, including offering eco-friendly packaging, sustainable production, and a commercial offer including closed-circuit concepts such as VIVE Profit, Re_Store and Ubrania do Oddania. A new format of Circular Boutiques stocking second-hand clothing in shopping centres has been launched in Galeria Katowicka in Katowice, Galeria Mokotów in Warsaw, Wroclavia in Wrocław and Wars Sawa Junior in Warsaw. This type of offer is also being introduced by international brands, such as Levi’s and the COS chain.
Retail parks still on the move
Only 55,400 sqm of retail space was added in Q1 2022. “The majority of developer activity was in smaller cities, although major agglomerations continue to attract investor interest due to the high purchasing power of their respective residents,” says Joanna Tomczyk, Senior Analyst in the Research and Consulting Department at JLL. There is currently 424,000 sqm under construction, 55% of which are retail parks. Among the larger projects under construction are the Karuzela shopping centre in Kołobrzeg (GLA 23,500 sqm, a Leroy Merlin shop is already open), the Nowy Fort Wola shopping centre in Warsaw (GLA 28,000 sqm) and phase two of ATUT Ruczaj in Kraków (GLA 25,000 sqm).
Two giant transactions in the market
“After the first quarter of 2022, the volume of retail property transactions is already approaching €700 million, the second-best result in the history of the Polish investment market. This is mainly due to two large and complex JV transactions related to the change of EPP’s company structure after its delisting from the Johannesburg and Luxembourg stock exchanges,” says Agnieszka Kołat, Head of Retail Investment, Capital Markets, JLL.
Following the acquisition by Redefine Properties, EPP formed two joint ventures, in which it sold an approximate 50% stake in each. Three joint ventures were formed, Horse JV included nine M1 shopping centres and two retail parks, while Community Properties JV included eleven shopping centres and three office properties.
“Investor interest continues to focus on retail parks and convenience centres. Already in the first three months of the year, we witnessed several interesting transactions, including the acquisition of the Młyn retail park in Wrocław by Lithuanian investor, Lords LB Asset Management, and a private investor’s purchase of the Stary Dworzec retail park in Bolesławiec. As expected, yields for prime retail parks in the first quarter of 2022 have compressed and are now at around 6.50% - 6.75%,” Agnieszka Kołat concludes.
