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The highest supply in three years and 40% of this year’s new openings in cities below 100,000 inhabitants

Lucyna Sliz

Associate, Head of Retail Business Development

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• Household consumption remains the key driver behind Poland’s rapid economic growth
• More than 180,000 sq m of new retail space was added to the Polish market in H1 2018
• Approximately 330,000 sq m is expected to be delivered by year-end 2018, which will represent the biggest annual supply in three years
• As much as 40% of new supply scheduled for H2 2018 will come onto the markets of cities below 100,000 inhabitants
• Mixed-use projects combining retail, services, residential, office/business, entertainment, cultural and F&B facilities are on the rise 

Global real estate services firm Cushman & Wakefield has published another edition of its MarketBeat report on the Polish retail market. More than 180,000 sq m of retail space was added to the market in H1 2018 and another 330,000 sq m is expected to be completed by year-end 2018. This will represent an increase of over 25% year-on-year (yoy), bringing Poland’s total retail stock to more than 14,800,000 sq m. The new supply will be concentrated in cities with fewer than 100,000 inhabitants, accounting for 40% of this year’s openings. More than 180,000 sq m of new retail space was added to the Polish market in H1 2018. Nearly 80% of that total was delivered through new openings and extensions of existing shopping centres. New and extended retail parks accounted for 15% of the new supply while retail space delivered through outlet centres made up approximately 6% of that volume. The largest new retail completions include Forum Gdańsk (62,000 sq m) and Gemini Park Tychy (36,000 sq m). Other shopping centres delivered in H1 2018 are smaller retail schemes of less than 20,000 sq m: Rondo Wiatraczna in Warsaw (11,000 sq m), Galeria Piastova in Gniezno (9,500 sq m) and Galeria nad Potokiem in Radom (5,180 sq m).

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This high supply of retail space is a response to demand largely driven by Poland’s rapid economic growth which hit 5.2% in Q1 2018, powered by household spending (up by 8.2% yoy) and steadily rising salaries (+7.3% yoy). The low unemployment rate standing at 5.9% at the end of June is another contributory factor. With such positive macroeconomic indicators, Poland is seeing an increase in retail developments and new brands enter the market such as Fissman, Dealz and Tedi. Poland is also being targeted by Primark. Despite the healthy supply in the first six months, Poland’s vacancy rate edged down by 0.8% to 3.2%, which is another confirmation of the Polish retail market’s good health. This resulted, among other things, from OBI taking over the space vacated by Praktiker and fitness club operators swiftly moving into the premises vacated by Jatomi.

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With a steadily rising demand and supply, rents remain unchanged. Prime rents for an approximately 100 sq m unit in Warsaw’s best-in-class shopping centres stand at EUR 100-130/sq m/month. Rents are lower at other major cities and stand at EUR 35-50/sq m/month for similar units.

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