Cushman & Wakefield has released a summary of retail market conditions in Poland. Approximately 200,000 sqm is likely to be added to the market by the end of this year. Most of that total will be delivered in retail parks that account for 77% of the development pipeline, which will be consistent with the trend seen in recent years. Rental rates are on an upward year-on-year trajectory while the average vacancy rate in the largest Polish cities has dipped by 1.2 pp year-on-year.
Supply turns negative in Q3
In the period July to September 2023, the Polish retail market saw a negative supply of -19,000 sqm. "Although 43,000 sq m was added to the market in the third quarter through new openings, closures accounted for as much as 62,000 sqm. It is worth emphasising, however, that approximately 144,000 sqm came on stream in the first half of the year, somewhat offsetting the negative result for supply for the third quarter which was largely due to the closure of the 54,000 sqm Galeria Malta shopping centre in Poznań", comments Ewa Derlatka-Chilewicz, Head of Research, Cushman & Wakefield.
Belg, a smaller shopping centre, was also closed down in the third quarter of 2023. New retail space was delivered in the three months to September through three retail park openings and extensions of four existing parks.
The largest completion was the Karuzela Retail Park in Biała Podlaska with an area of 19,000 sqm. The other two new retail parks were Go! Park in Jasło and Vendo Park in Łapy. In addition, approximately 10,500 sq mwas added to the market through extensions.
"Poland’s total retail stock currently stands at around 16 million sq m. The outlook for the fourth quarter looks promising as approximately 200,000 sqm of retail space is expected to open in the final months of the year. A total of 500,000 sqm is under construction, with retail parks accounting for 77% of the development pipeline", adds Ewa Derlatka-Chilewicz.
Demand: six new brands enter Poland
The third quarter of 2023 saw six newcomers enter the Polish retail market. These included the US fast food chain Popeyes, the Lithuanian-based retailer Candy Pop, the Ukrainian fashion brand Solmar, the Spanish brand for jewellery Acium, the Italian restaurant brand L'Osteria and the Polish Home & Deco brand Zwieger, which previously had only an online presence. A total of 18 brands have debuted on the Polish market in the year to date - a stable figure and comparable with that for previous years.
Sales: a rebound but still in negative territory
Retail sales statistics improved during the third quarter of 2023. The falls in sales (in constant prices) were smaller than in the second quarter: -4.0% year-on-year in July and -2.7% year-on-year in August. Retail sales volumes for August rose by 2.8% month-to-month, with the only retail category growing year-on-year being automotive (up by 3.4%). The biggest slump in business for the second quarter in a row was recorded for newspapers and books (-14.3%), other (-13.4%) and furniture, electronics and home appliances (-10.6%). In August 2023, Poland’s online penetration rate stood at 8.2%, down from its highest of 8.7% in February but well above its lowest point of 7.7% in June.
An uplift in footfall but turnover is still in negative territory
"The average footfall for shopping centres and retail parks during the summer holiday period was 463,000 customers per retail scheme in July and 478,000 in August, up by 4.5% and 6.3% year-on-year respectively. Broken down by size, the outperformers were the largest shopping centres with over 60,000 sq m of GLA and large ones (40,000-60,000 sqm), which saw their footfall levels grow by 8.2% and 7.3% year-on-year respectively", comments Ewelina Staruch, Analyst, Cushman & Wakefield.
In July 2023, net nominal retail sales in prime retail schemes averaged PLN 1,071 per square metre of floor space before marginally improving to PLN 1,107 per square metre in August, up by 6.5% and 8.5% year-on-year respectively.
"Unfortunately, real retail turnover - taking account of inflation - was down year-on-year by 4.3% in July and 1.6% in August. However, due to falling inflation rates, the declines in real turnover were not as deep as in previous months", adds Ewelina Staruch.
Rents: all the three retail sectors see year-on-year rental growth
In the third quarter of 2023, shopping centres, retail parks and high streets alike posted positive year-on-year rental growth. "The highest rise in rental rates of around 17% year-on-year was reported for retail parks. The downturn in the consumer market and lower real turnover levels experienced by tenants are the main drivers behind the downward pressure on non-prime rents", says Paulina Bauer, Head of Retail Asset Services, Cushman & Wakefield.
Retail vacancy rates fall in the largest Polish cities
The average retail vacancy rate in Poland’s largest cities currently stands at 3.5%, down by 1.2 pp year-on-year. More importantly, falls were recorded in six out of the eight largest cities, with the availability of retail space at the lowest in Krakow, Łódź and Szczecin.
