Retail Market in Poland - October 2021
An economic recovery is underway, driven by a rebound in retail sales. GDP in Poland is likely to grow much higher than in EU and the Eurozone.
A strong recovery is taking hold as governments have started to ease restrictions and vaccination rates continue to rise. The recovery is mostly driven by a rebound in retail sales.
Although the Polish retail market is still struggling with the effects of COVID-19, forecasts seem favourable compared to the rest of Europe. According to Oxford Economics, GDP in Poland is likely to grow at an average of 3.5% per year between 2021 and 2025, much higher than the figure for the EU as a whole and the Eurozone (2.8%).
The after-effects of the pandemic are gradually fading, considering the fast-paced recovery of both turnover and footfall in large shopping centres since May. Stationary retail is slowly but surely getting back on track, and e-commerce has stabilised on the level of 7% to 8% of the total retail sales (according to data from Statistics Poland).
During Q3 2021 developers delivered 98,000 m2 of new modern retail space to the market. Nearly 50% of that new supply was in stand-alone retail warehouses, mainly in DIY stores. At the same time 22,000 m2 of GLA in shopping centres was delivered to the market, including CH Gwarek (7,000 m2 of GLA) in Jastrzębia-Góra and the extension of Focus Mall in Zielona Góra (+15,000 m2 of GLA). Remaining new stock was in retail parks (16%) and convenience centres (13%). JLL predicts that 2021 should close with over half a million m2 of total new retail space, with retail parks accounting for more than 40% of that space.
The above-mentioned pipeline reflects a shift in retail format structure in Poland.
The vacancy rate in shopping centres operating in Poland’s major agglomerations grew slightly, as expected, from 5.3% in August 2020 to 5.9% in August 2021, reflecting not only the echoes of the pandemic, but moreover due to the final withdrawal of Tesco from Poland.
As expected, the third quarter of 2021 followed the trends set in the first half of this year. Although the number of transactions recorded in Q3 was the third highest ever recorded in like-for-like periods, the total volume was quite a long way from the average volume over the last decade. The retail investment turnover in 2021 to date totalled almost EUR 450 million in 27 deals, of which EUR 160 million came from the eight transactions closed in Q3. Investors are still focused on retail parks, convenience centres and single-anchored properties occupied either by food stores or DIY chains, ideally secured by a rock-solid covenant. The market seems to confirm that opportunistic sales of shopping centres have also been targeted by investors over recent months.
The retail landscape, undoubtedly altered by the pandemic, challenges retailers in adopting to new circumstances and meeting the reshaped needs of customers. New types of customers, known as “fusion shoppers”, make purchases via multiple channels (online, offline and click & collect), expecting complemented and satisfying shopping experience. Along with the omni-channel style of shopping, the convenience and quick commerce trend is strengthening. As a result, dark stores operated among others by Glovo, Bolt, Wolt or Lisek are opening in the major Polish cities, offering the express delivery in as little as 10 minutes.
Retailers’ attention is also focused on the rising environmental issues. In line with the ESG (environmental, social and governance) strategy, tenants want to choose environmentally friendly retail space. They are also making pro-environment changes themselves.
The 15-minute city concept is widely discussed in urban planning and involves access to essential urban services within a 15-minute walk or bike ride. This inspires developers to look for optimized locations near densely populated areas. Therefore, retail parks and convenience centres are the basis of new ideas about the developing of flats or flex offices on the top of existing retail schemes.
We encourage you to read full latest JLL report on the retail market in Poland. The publication is also available in Polish.