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News Release

Warsaw

Development in Poland's retail market continues apace

708,000 sq m of new retail space is under construction across Poland, including 675,000 sq m in shopping centres. Strong retail construction continues in major Polish agglomerations. Redevelopments, and refurbishments of existing retail schemes still cons


International advisory firm JLL summarizes Q3 2015 on Poland's retail market.​

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At the end of September 2015, total modern retail stock in Poland totalled 12.58 million sq m and comprised as follows: 8.99 million sq m in shopping centres; 3.39 million sq m in retail parks and warehouses and 0.20 million sq m in outlet centres.

In Q3 of 2015 retail stock grew by only 106,500 sq m with 46,300 sq m from the biggest delivery so far this year - the Sukcesja shopping centre in Łódź. Other completed projects include: Agata Meble (15,000 sq m) in Lublin, Castorama (11,600 sq m) in Cieszyn, as well as extensions of Wola Park in Warsaw (+17,600 sq m), Galeria Pomorska in Bydgoszcz (+10,000 sq m) and Factory Ursus in Warsaw (+6,000 sq m). Between January and the end of September 2015, over 316,000 sq m of retail space came on stream, including 225,000 sq m in shopping centres.

Anna Bartoszewicz-Wnuk, Head of Research and Consulting at JLL, explains: "The moderate level of completions in Q3 is not surprising, given that most developers usually aim to open new centres in Autumn in order to take advantage of the Christmas shopping season. It should also be noted that the strong retail developer activity continues apace in major Polish agglomerations. In total, 708,000 sq m of retail space is under construction across Poland, with shopping centres accounting for 675,000 sq m".

The biggest schemes under development are Posnania (100,000 sq m) in Poznań, Wroclavia (64,000 sq m) in Wrocław and Forum Gdańsk (62,000 sq m). In September 2015, GTC laid the cornerstone for Galeria Północna (64,000 sq m), one of its flagship projects in Warsaw.

In Q4 alone, according to developer plans, the market may even gain up to 330,000 sq m of new retail space including 295,000 sq m in shopping centres. Zielone Arkady in Bydgoszcz (50,000 sq m), Supersam (23,000 sq m) in Katowice, Galeria Galena (31,400 sq m) – the first modern shopping centre in Jaworzno - as well as Vivo! (32,700 sq m) in Stalowa Wola and Nowy Rynek centre (24,000 sq m) in Jelenia Góra are scheduled to open during Q4 2015.

Edyta Potera, National Director, Retail Agency at JLL, says: "Redevelopments and refurbishments of existing retail schemes are a crucial element of the strategy that owners and property managers implement for aging objects. These steps result from growing competition and changing customer expectations. In Q3, new space in extensions of Galeria Pomorska, Wola Park and Factory Ursus entered the market. More investments are underway, including Centrum Franowo in Poznań, Morena in Gdańsk and ETC centres in Swarzędz and Gdańsk, which are in the process of redevelopment and refurbishment".

Demand

Recently, five international retail and restaurant chains announced their debut on the Polish market. Turkish fashion brand Colin's commenced operations in Bonarka City Center, and Origins opened their first unit in Galeria Mokotów. In addition, three well- known franchisee restaurants launched operations in Poland: Fuddruckers and Dairy Queen (both in Wola Park) in Warsaw and Paul (Warsaw Financial Center). Furthermore, Dunkin' Donuts plan to re-enter the Polish market.

"The trend of extending restaurant and food ranges in shopping centres is also becoming increasingly visible in Poland. The redevelopment of real estate is partly in line with society's growing disposable income. Increasing space in order to accommodate more dining and entertainment zones might encourage new international chains to enter the Polish market," comments Edyta Potera.

Rent and vacancy rate

"As of Q3 2015, Poland's shopping centre density ratio stood at 233 sq m per 1,000 residents. We estimate that Poland will catch up with Western European levels of 262 sq m by 2020," adds Anna Bartoszewicz-Wnuk.

Vacancy rates in the major agglomerations range between 1. 6% and 4.0%, with the exception of Wrocław (4,6%).

Rents across major agglomerations have remained relatively stable with the exception of Warsaw and Poznań. In Warsaw, prime rents, which refer to units of 100 sq m earmarked for fashion & accessories and located in the best-performing assets, have seen an increase and now stand at €120/ sq m/ month.

Investment market

The most significant retail investment transaction concluded in Q3, was Foncièrie Euris and Rallye selling Centrum Riviera in Gdynia to Union Investment with a value in the region of €291–300 million.

Agnieszka Kołat, National Director, Retail Investment CEE at JLL, comments: "The year-to-date retail investment volume stood at over €660million, and has already exceeded 2014's total of €570 million. There are several other retail investment transactions which have preliminary sale agreements signed with closing scheduled by the end of 2015. Therefore, if these deals close as planned, it is highly likely that this year the total volume of retail transactions will exceed the €1.3 billion registered in the market in 2013".