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News Release

Warsaw

High construction activity on Poland's retail market

794,000 sq m of retail space is currently under construction across Poland, with shopping centres representing 720,000 sq m.


International advisory company, JLL, presents its report summarising Q2 2014 and analysing key trends on Poland's retail market.

Stock and supply

252,000 sq m of new retail space hit the market in H1 2014, of which ca 205,000 was completed in the shopping centre sector. The biggest shopping centre that opened in the first six months of the year was Atrium Felicity in Lublin (73,000 sq m of GLA). Q2 alone, brought ca 88,000 of new retail space to the market, including 64,000 sq m in three new shopping centres and one extended centre; and 24,000 sq m in the retail warehousing sector (two retail park openings, a stand-alone DIY unit and a hypermarket). The three shopping centres that opened in Q2 are: Galeria Bursztynowa in Ostrołęka (27,000 sq m) GLA), marcredo Center in Kutno (16,000 sq m) and Pogodne Centrum in Oleśnica (7,700 sq m). Moreover, Gemini Park in Bielsko-Biała was extended by 13,000 sq m. New Q2 projects within the retail warehousing sector from Q2 include: two Karuzela Parks in Lubliniec and Turek, one stand-alone Bricoman DIY unit (8,100 sq m) in Jaworzno and a E.Leclerc hypermarket (5,000 sq m) in Szczecin. With the exception of Szczecin, every other city which saw new retail asset opening in Q2, is inhabited by less than 100,000 people.

The total retail supply now stands at 12.1 million sq m of GLA, including: shopping centres (8.7 million sq m), retail parks (1.3 million sq m), retail warehouses (1.9 million sq m) and outlet centres (163,000 sq m). The shopping centre density in Poland currently stands at 226 sq m per 1,000 inhabitants i.e. above the European average of 191 sq m, but below the Western-European average of 255 sq m.

794,000 sq m of retail stock is currently under construction across all retail formats, with shopping centres representing the largest share (720,000 sq m, 31 projects). Major new projects under construction are: Centrum Posnania in Poznań (100,000 sq m, formerly known as Łacina), Zielone Arkady in Bydgoszcz (50,000 sq m), Sukcesja in Łódź (45,000 sq m), Galeria Warmińska in Olsztyn (41,500 sq m), Tarasy Zamkowe in Lublin (38,000 sq m), Galeria Metropolia in Gdańsk (34,000 sq m) and Galeria Galena in Jaworzno (31,000 sq m). Seven centres are undergoing extensions, including Magnolia Park in Wrocław.   

Anna Wysocka, Head of Retail Agency, JLL, said: "We observe that smaller markets are attractive locations for developers and retailers. This will be even more pronounced with the arrival of the shopping centres projects currently under construction: 37% of developing pipeline will contribute to the growth of stock in cities of less than 200,000 citizens. Nevertheless major agglomerations remain very active – 44% of future shopping centre floorspace will open in these cities, with the remainder in cities of between 200,000 and 400,000 residents".

The retail supply looks set to grow by 564,000 sq m in 2014, with 455,000 sq m in shopping centres (in line with the 2013 completion of 466,000 sq m).

Demand remains strong

Poland's growing economy clearly impacts upon the retail market sentiment. The unemployment rate has been in downward trend falling (12.5% in May 2014) and recent GDP forecasts have been revised upwards: 3.2% in 2014 and 3.6% in 2015.

"Poland is an attractive market for international retailers. Fashion retailers make up the majority of those who have recently entered the market, including Spanish brand Inside, Olimp Live & Fight from USA and Italian outlet store Gattinoni Roma. Additionally, two fitness clubs, British CityFit and Fitness24Seven from Sweden, have decided to make their mark in Poland. Also, brands already present on the market are searching for expansion opportunities. Some chains like Carry, Zara, Reserved, CCC or Rossmann are enlarging their stores, others are expanding their portfolios by introducing new brands. For example, after Sinsay's successful launch, LPP Group is about to introduce two new concepts, selling fashion and household goods, to the market. Fashion chain Kiabi from the Auchan Group is set to open their first stores in Warsaw shortly. It is worth noting, however, that tenants present a selective approach and focus mostly on existing prime assets and projects under extension with short to mid-term delivery", Anna Wysocka added.

Rents

Unsurprisingly, the highest prime rents for a prominently located 100 sq m unit shop from the fashion category in leading shopping centres, are found in Warsaw. Due to recent recomercialisation processes in prime retail assets in the capital city, the rents have increased by 5% and now stand at €105 / sq m / month. JLL expects prime rents in the remaining markets to remain stable in the short to mid-tem.

Retail Investment Market

Agnieszka Kołat, National Director, Retail Investment CEE, JLL, commented: "The total volume of retail transactions concluded in Poland in H1 is estimated at €368 million. In Q2 alone, transactions in the retail segment amounted to €73 million. Taking into account investor activity and ongoing negotiations, retail investment market can reach approximately €1.5 billion of sales and acquisitions by the end of 2014".

Major transactions in H1 included: Poznań City Center bought by a consortium of Resolution and ECE Fund from TriGranit, Europa Capital and PKP in Q1 and the sale of Galeria Mazovia by Lewandpol to CBRE Global Investors in Q2 (both for undisclosed prices).