The international advisory agency, Cushman & Wakefield, has summarized the situation in the commercial real estate market. By the end of the year, the sector may see an increase of approximately 200,000 sqm, with the trend in recent years indicating that a majority will be dedicated to retail parks, accounting for 77% of the construction area. Rentals in commercial properties have been increasing annually, while vacancy rates have declined, decreasing by 1.2 percentage points from last year in major cities.
SUPPLY: Negative Supply in the Third Quarter
The period from July to September 2023 in the Polish retail market was characterized by a negative supply of -19,000 sqm.
New openings in the third quarter added 43,000 sqm to the market. However, 62,000 sqm were closed. “It’s worth noting that in the first half of the year, the market gained a total of about 144,000 sqm, which somewhat balances the negative supply result from the third quarter, primarily due to the closing of the Poznań Malta Gallery with an area of 54,000 sqm,” comments Ewa Derlatka-Chilewicz, Head of Research at Cushman & Wakefield.
Furthermore, the smaller Belg shopping center ceased operations in the third quarter. Meanwhile, three new facilities opened and four existing ones expanded, all of which pertained to the currently popular retail park format.
The largest newly opened facility was Karuzela Retail Park in Biała Podlaska, spanning 19,000 sqm. The other two new parks were Go! Park in Jasło and Vendo Park in Łapy. Thanks to completed expansions, the market gained an additional 10,500 sqm.
Poland’s total modern retail space currently stands at around 16 million sqm. The fourth quarter looks promising with approximately 200,000 sqm of retail space expected to open. “Retail parks will play a key role in new supply, accounting for 77% of the area under construction,” adds Ewa Derlatka-Chilewicz.
DEMAND: Six New Brands Enter Poland
In the third quarter, the Polish retail market welcomed six debutants. The American restaurant chain Popeyes, Lithuanian Candy Pop, Ukrainian fashion brand Solmar, Spanish jewelry brand Acium, Italian restaurant brand L’Osteria, and Polish Home & Deco brand Zwieger, which was previously online-only, opened their first stores in Poland. Since the beginning of the year, a total of 18 brands have debuted in Poland, a number consistent with previous years.
RETAIL SALES: Despite Recovery, Still in the Red
Q3 2023 saw improvements in retail sales statistics. The drops were not as significant as in Q2, with sales declining by -4.0% in July and -2.7% YoY in August (at constant prices). On a monthly basis, August saw a 2.8% rise in retail sales, with only the automotive category registering an increase of 3.4% YoY. The most significant drops were in Media and Books (-14.3%), Other (-13.4%), and Furniture, Electronics, and Appliances (-10.6%). E-commerce accounted for 8.2% of retail sales in August. E-commerce peaked in February at 8.7% and hit its lowest in June at 7.7%.
VISITORS & REVENUES: Visitor Numbers Up, Revenues Still Down
Visitor numbers in shopping centers and parks in the summer period averaged 463,000 in July and 478,000 in August per facility. This represents YoY increases of 4.5% and 6.3% respectively. “Analyzing the data, the largest facilities, those over 60,000 sqm, saw the most significant growth at 8.2% YoY, and large ones (40,000-60,000 sqm) at 7.3% YoY,” says Ewelina Staruch, Market Analyst at Cushman & Wakefield.
Tenants’ revenues in modern shopping facilities reached an average of 1071 PLN net per sqm in July. In August, this figure improved slightly to 1107 PLN net per sqm. However, in real terms, taking inflation into account, revenues still declined by 4.3% YoY in July and 1.6% YoY in August. “With declining inflation, real revenue drops are not as deep as they were a few months ago,” adds Ewelina Staruch.
RENTS: Annual Increases Across All Three Retail Sectors
Shopping centers, parks, and shopping streets all saw YoY rental increases in Q3 2023. Rents in retail parks saw the highest jump, with an increase of around 17% YoY. “A weaker consumer market and lower real revenues of tenants are the main factors putting pressure on rent reductions in facilities outside the ‘prime’ group,” explains Paulina Bauer, Head of Retail Asset Services at Cushman & Wakefield.
VACANCIES: Decline in Unrented Space in Poland’s Major Cities
The average vacancy rate in shopping facilities in Poland’s largest cities fell by 1.2 percentage points YoY, currently standing at 3.5%. Importantly, six out of the eight largest surveyed cities saw this decline, with Krakow, Lodz, and Szczecin having the least available space for rent.
