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A mature retail market that is poised for further growth

Marek Noetzel
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Key trends characterising the Polish retail property market include retail space saturation in large cities, searching for new development sites, and new formats coming onto the market. The growth of the retail sector in Poland, which will make a strong presence at the MAPIC trade show in Cannes in November, is notable, but challenges remain for both developers and tenants.

In the past 25 years Poland witnessed a rapid growth of the retail property market and implementation of good solutions that had proved successful in Western countries. Many projects completed across the country provide access to products and services that were previously unavailable on the Polish market. As a result of activities of developers, tenants and city authorities Poland now has a mature and saturated retail market. Retail space saturation is particularly high in most regional cities and a large number of small and medium-sized cities. According to Cushman & Wakefield’s data, approximately 500,000 sq m has been delivered onto the Polish market this year and another 800,000 sq m is currently under construction. This year’s largest completions that have recently opened include Zielone Arkady in Bydgoszcz, Aleja Bielany in Wrocław, Sukcesja in Łódź, Galeria Neptun in Starogard Gdański and Modo Fashion House in Warsaw. More grand openings, including Posnania in Poznań, are scheduled for 2016. Therefore, in the long term no spectacular retail projects are expected to be completed in these cities, except for Warsaw, where there is still room for at least three or four large shopping centres despite the presence of many retail schemes on the capital city’s market. Bielany, Białołęka and Wilanów are the only districts in Warsaw lacking large-scale shopping centres with high-profile brands under one roof. 

As a result of growing retail space saturation, particularly in large-scale retail schemes, tenants are gaining an increasingly strong position. Customers are moving away from older shopping centres to modern centres with attractive offers. Owners of older retail schemes may find it very difficult to keep rents stable unless they change the format of, extend or thoroughly refurbish their properties. Many owners are already making such changes. Examples include Warsaw’s Promenada shopping centre, which has been repeatedly extended in recent years, and Galeria Glinki in Bydgoszcz, which is changing its format to be renamed Metropolitan Outlet.

In addition to the growing number of shopping centres, there are also new formats coming onto the market, targeting customers of large-scale retail schemes. On the one hand, with the revitalisation of city centres there is renewed interest in high streets which offer both a unique atmosphere and an excellent location. Following major investments, Nowy Świat Street in Warsaw, 3 Maja Street in Katowice and Floriańska Street in Krakow have claimed back their former splendour and attract inhabitants with services and branded stores. On the other hand, convenience centres which are located close to housing estates serve a complementary function, offering mainly basic services and staple products.

The Polish retail market has undergone many changes in recent years. Customers now enjoy a more interesting choice of locations in which to do shopping comfortably, in line with their lifestyles and pace of life, and the multitude of retail formats is just the market’s response to consumer needs.

Author: Marek Noetzel, Partner and Head of Retail Department, Cushman & Wakefield