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News Release

Warsaw

Retail market in Poland – big agglomerations on the rise

590,000 sq m of shopping centre stock is currently under construction - 252,000 sq m of which will be delivered in the largest agglomerations. Retail markets in Wrocław, Poznań, Łódź, Tri-City and Warsaw on the verge of changes.


​International advisory firm JLL summarizes the H1 2015 on the retail market in Poland.

Jan Jakub Zombirt, Associate Director, Research and Consulting, JLL, says: "At the end of Q2 2015 modern retail stock in Poland totalled 12.54 million sq m consisting of 8.96 million sq m (72%) in shopping centres; 3.39 million sq m (27%) in retail parks and warehouses, and 0.19 million sq m (1%) in outlet centres. In H1 2015; 148,600 sq m of shopping centre space was commissioned for use, including 46,600 sq m in Q2. In terms of shopping centre density, with an average of 233 sq m/ 1,000 residents, Poland remains above the European average of 198 sq m but below the 260 sq m to be found in western Europe".

The second quarter of 2015 was rather modest in terms of new supply, as stock grew only by additional 54,600 sq m of GLA across all the retail formats (46,600 in shopping centres only), with the delivery of Galeria Neptun (25,000 sq m) in Starogard Gdański, Corso in Świnoujście (10,000 sq m), extensions of Galeria Sudecka (+10,500 sq m) and Galeria Venus in Świdnik (+1,100 sq m), as well as Outlet Center in Białystok (8,000 sq m).

Stock under construction - largest agglomerations on the rise

 "Retail markets in several largest agglomerations - primarily in Wrocław and Poznań, but also in Łódź, Tri-City, Katowice and Warsaw are preparing for delivery of projects that will significantly change their retail map. The total current supply of shopping centre stock under construction amounts to 590,000 sq m. However, unlike in recent years, much of this pipeline - 252,000 sq m - is being developed in the largest agglomerations", adds Jan Jakub Zombirt.

In Wrocław, Unibail-Rodamco has started the development of Wroclavia (64,000 sq m), while in Poznań Apsys is already well advanced with Posnania (100,000 sq m). Retail competition will be fierce in these agglomerations, as density ratios are already at very high levels: 617 sq m/ 1,000 residents in Wrocław and 622 sq m/1,000 residents in Poznań, against the average density in the largest agglomerations of 502 sq m.

In Łódź, the Sukcesja shopping mall is under construction (46,000 sq m), in the Tri-City Galeria Metropolia (34,000 sq m), and work on Forum Gdańsk (62,000 sq m) will commence soon. In the Katowice agglomeration, Supersam (23,000 sq m) in Katowice and Galeria Galena in Jaworzno, (31,400 sq m) will be delivered this year. In Warsaw, one of GTC's flagship projects, Galeria Północna shopping centre (64,000 sq m) in the Białołęka district has now received a building permit, while another GTC project, Galeria Wilanów (61,000 sq m), is planned to start next year as administrative procedures are still ongoing. Both projects are being leased by JLL.

Other projects currently under way in the Warsaw agglomeration include: Ferio Wawer (12,500 sq m), Fabryka Wołomin (30,000 sq m), Galeria Legionowo (10,500 sq m), the extension of Wola Park (17,600 sq m),and Hala Koszyki, a mixed-use project designed to combine a shopping gallery (7,500 sq m) and offices (approximately 13,000 sq m).

With regards to other cities, retail development activity can be best described as moderate. In H2 2015 only Zielone Arkady (50,000 sq m) will be delivered and Galeria Pomorska will be extended (+10,000 sq m) – both in Bydgoszcz.

Demand

Marta Augustyn, National Director, Retail Agency JLL, says: "Overall demand for retail space in Poland remains strong, as the economic performance over the last few years has put the country in the top tier of EU states. The increasing wealth of Polish society and gradually falling unemployment have been important factors for the increase in retail sales. The promising outlook for economic growth in the next three years will certainly have a positive impact on retailers, developers and investors."

The Polish market, due to its considerable size, continues to attract new international retailers. Every quarter, new international retailers announce their entry to the Polish market. In Q2 2015 brands that made their debut included Superdry, Decimas, Courir and Ecco Leather Goods.

The food segment is consolidating. In the hypermarket sector, the number of retailers is gradually shrinking and their locations are being taken over by competitors. Current market leaders in terms of branch numbers are Carrefour and Auchan (Auchan development received a boost from the takeover of Real). The fastest growing sector in recent years have been discount and supermarket chains, which have plugged a gap on cities' retail maps.

"One of the hot topics in today's retail world is omnichannel, fuelled by the rapid growth of ecommerce. It is perceived by some market participants as a potential danger, while others view it as a chance to increase sales, attract new clients and engage in more quality development", adds Marta Augustyn.​

Rents

Rental levels across major cities remain relatively stable as compared to the previous quarter. Prime rents, which refer to shop units of 100 sq m earmarked for fashion & accessories and located in the best-performing shopping centres in Warsaw, have seen an increase within the last couple of months and can now command as much as €110/ sq m/ month. In other main agglomerations the rental average is from € 40 to 55 / sq m/ month.

Prime rents in major agglomerations in Q2 2015

Source: JLL, Q2 2015

Good perspectives for the investment market

Agata Sekuła, International Director, Head of Retail Investment CEE at JLL, comments: "The total volume of retail investment deals concluded in Poland in Q2 2015 was in the region of €110 million. Transactions included the acquisition of Focus Park in Rybnik by Union Investment, TH Real Estate's purchase of a 50% interest in Neinver's assets in Factory Annopol in Warsaw, Futura Park in Kraków with the adjacent Factory Kraków outlet; as well as smaller deals."

Total investment volume for H1 2015 amounted to €285.

"In Poland,2014 witnessed €570 million of retail transactions. With the number of deals currently ongoing it is highly possible that 2014's volume will be exceeded in Q3 2015", summarizes Agata Sekuła.