Cushman & Wakefield has summarised the situation on the Polish retail market in the second quarter of 2024. There were eight new retail completions with the development pipeline comprising approximately 400,000 sqm. This indicates healthy supply levels amid unwavering occupier demand and strong retail sales, shopping centre footfall and turnover figures.
Supply: retail development activity shows no sign of abating
Approximately 124,000 sqm of modern retail space came on stream in the second quarter of 2024 through eight new completions, three extensions and two redevelopments.
"The Polish retail market saw robust deliveries in the April-June period, with new retail park openings in Jastrzębie-Zdrój, Olsztyn, Świebodzin, Tychy, Zawiercie and Zgorzelec. The second quarter also saw the opening of Galeria Starówka in Leszno and a Castorama store in Biała Podlaska, as well as the completion of the extensions of Dekada in Grójec and Nowa Górna in Łódź. In addition, three buildings vacated by Tesco were redeveloped and replaced by two retail parks and a Leroy Merlin store in Poznań. This brought Poland’s total retail stock to 16.4 million sqm, with another 250,000 sqm expected to be added by the end of this year", comments Ewelina Staruch, Senior Analyst, Cushman & Wakefield.
According to Cushman & Wakefield, at the end of June 2024 there was approximately 400,000 sqm under construction and scheduled for completion in 2024-26. Of that total, 300,000 sqm will be delivered through 29 new retail projects, with the remaining 100,000 sqm expected to come on stream through extensions and redevelopments. There are nine extensions underway - these include Designer Outlet Kraków, Brama Pomorza in Chojnice and Galeria Hosso in Police. The largest projects under construction are the Nowa Sukcesja Shopping Centre in Łódź (35,000 sqm) and retail parks: Silwana in Gorzów Wielkopolski (26,000 sqm) and BIG Ostróda (25,000 sqm).
Demand: three new brands enter Poland
The second quarter of 2024 saw three brands enter the Polish retail market. All the debuts took place in Warsaw. The newcomers included Romanian-owned bakery Luca, which chose Polna Corner as its first location, the Veselka craft bar from Ukraine in the Warsaw Brewery complex and Answear.com, which opened its first physical store in the Norblin Factory.
Retail sales: a positive first half of the year
"Retail sales were in positive growth territory in the second quarter of 2024, with year-on-year volumes up by 4.1% in April and 5.0% in May, reveals the latest data from Statistics Poland. By comparison, retail sales readings for the second quarter of last year were negative: -7.3% year-on-year for April and -6.8% year-on-year for May. This positive trend will certainly be noticed by consumer brands and may encourage them to go ahead with expansion plans and open new locations across Poland", comments Ewelina Staruch, Cushman & Wakefield.
In terms of the best-performing retail categories in constant prices in May 2024, motor vehicles, motorbikes and spare parts stood out, with sales up by 23.8% year-on-year, followed by category other (+23.5%). Pharmaceuticals, cosmetics and orthopaedic equipment saw retail sales grow 10.2% year-on-year. Newspapers and books which experienced huge falls in sales throughout 2023 have turned in a positive performance in 2024, with a year-on-year increase of 1.5% in May. Annual falls in sales were reported for textiles, clothing and footwear (-13.5% year-on-year), followed by furniture, radio, TV and home appliances (-8.4% year-on-year) and food, beverages and tobacco (-1.0% year-on-year).
"With consumer sentiment steadily improving, key retail categories for shopping centres, i.e. textiles, clothing and footwear in particular, are likely to see retail sales bounce back in the coming months", comments Ewa Derlatka-Chilewicz, Head of Research, Cushman & Wakefield.
In May 2024, Poland’s online penetration rate stood at 8.6% and remained above 8% throughout the first half of the year.
"Of the nine retail categories according to Statistics Poland, the best online performers were newspapers and books (23.3%) and textiles, clothing and footwear (23.0%). It is worth noting that the fashion sector has successfully embraced omnichannel and most fashion brands have already adapted their distribution channels to consumer behaviours", adds Ewa Derlatka-Chilewicz.
Footfall and turnover: customer footfall and spending stabilise
"The average footfall for shopping centres and retail parks in the April-June period was approximately 430,000 customers per retail scheme, up by 5% year-on-year but by as much as 16% from the same time in 2022. The best performers year-on-year were the smallest and largest shopping centres, with under 20,000 sq m and over 60,000 sq m of retail floorspace respectively", adds Ewa Derlatka-Chilewicz.
Net turnover of shopping centre tenants averaged PLN 1,084 per square metre in April 2024 and exceeded PLN 1,050 in May. Average nominal turnover for the second quarter of 2024 was up by 2% year-on-year, but in real terms - when accounting for inflation - was on a par with last year’s. And as in the case of footfall levels, the strongest real year-on-year growth in turnover of 5% and 2% was recorded for the smallest and largest shopping centres respectively.
Rents: prime retail rents remain on an upward trajectory
"Rent indexation to the inflation rate at the beginning of the year and unwavering occupier demand for flagship units pushed prime retail rents up. Rental growth averaged approximately 15% year-on-year in the second quarter for shopping centres, retail parks and high streets alike", concludes Paulina Bauer, Head of Retail Asset Services, Cushman & Wakefield.
