Summary of the last year and prognosis for 2013 according to Colliers International:

OVERVIEW

  • In 2012, developers delivered 485,600 m2 of modern retail space to the market, representing a 22% decrease compared to the previous year. The new supply was dominated by smaller retail developments with a leasable area not exceeding 35,000 m2. The largest retail scheme supplied in 2012 was Galeria Rzeszów (42,000 m2 of leasable space), which was completed in November 2012.
  • More than 30% of the new supply was located in the eight largest Polish agglomerations, while almost 60% was delivered in small and medium-sized cities (less than 200,000 inhabitants).
  • New developers of outlet centres have appeared on the Polish retail market. The first outlet centre was delivered in Szczecin (Outlet Park Szczecin) by Echo Investment, while in Rzgów (near Łódź) Ptak Outlet was completed by Centrum Targowe Ptak SA.
  • At the end of the year, the total supply of modern retail space stood at 9.17 million m2.
  • In 2012, new international retail chains entered the Polish market, e.g. the American brands Victoria’s Secret, Bath&Body Works and American Eagle Outfitters as well as Scandinavian COS (Collection of Style) owned by H&M Group.
  • Pop-up shops, temporary shops that open in a given area for only a specified time, are starting to appear in shopping centres. This type of store allows retailers to identify the market and is generally a solution chosen by new brands and young designers, such as Pop-Up Shop Bohoboco and Loft37.pl and Pop-Up Store Blessus located in Stary Browar or the Łukasz Jemioł boutique in Manufaktura.
  • The vacancy level in the largest Polish agglomerations did not exceed 5%. The lowest space availability was recorded in Warsaw and Szczecin.YIELDS

RETAIL SECTOR IN MAJOR CITIES IN POLAND

  • Warsaw with more than 1.35 mln m² of modern retail space is the biggest retail market in Poland. Specialized SCs constitutes 25% of total stock (almost 278,000 m²). In 2012 one shopping centre was delivered to Warsaw market, namely the first phase of Auchan Łomianki (18,000 m²). Currently there is 59,000 m² under construction in three new retail schemes (Galeria Miejska Plac Unii, Galeria Podkowa and Factory Annopol outlet centre) and two extensions (Galeria Mokotów and the 2nd phase of Auchan Łomianki). The vacancy rate is very low, at the level of 1.6%. Retail market in Warsaw records the highest rents in Poland. Prime rental value for units of approx. 100 m² located in the best shopping centres and leased by fashion tenants amounts to more than EUR 90/m².
  • Kraków retail market offers 490,000 m² located in 13 shopping centres. One retail complex represents specialized SC – Futura Park with Factory outlet. In terms of retail pipeline one scheme is under construction – Galeria Bronowice (60,000 m²) developed by Immochan. Vacancy rate recorded in shopping centres in Kraków is 4.5%, which is the highest level among major Polish agglomerations, however there are significant differences between individual shopping centres.
  • Poznań – at the end of 2012 total retail stock amounted to 520,000 m², nearly 15% of which are specialized SC. Currently two traditional shopping centres are under construction – located at the railway station Poznań City Center (58,000 m²) and small mix-use scheme Galeria MM (5,000 m² of retail space). Retail market in Poznań is relatively balanced with vacancy rate at the level of 2.3%. Prime rent amounts to approx. EUR 48/m², however some decrease of rental levels may be expected due to relatively high pipeline.
  • Wrocław with retail space density ratio at the level of approx. 720 m²/ 1,000 inhabitants is the most saturated retail market among major Polish agglomerations. Total stock amounts to 560,000 m². Nearly 90,000 m² is located in specialized SC. One shopping centre was delivered to the market in 2012 – Sky Tower (25,000 m²). Retail market in Wrocław should be relatively stable in 2013, as no retail scheme is under construction.
  • Tricity is the third biggest retail market in Poland. Traditional SCs offer more than 470,000 m², while specialized SCs – 154,000 m². In 2012 nearly 50,000 m² was completed in two new projects (Galeria Szperk and Centrum Kowale) and in three extensions of existing shopping centres. Currently, 45,500 m² is under construction (extension of Wzgórze SC).
  • Upper Silesia with 945,000 m² is the second largest retail market in Poland. Relatively low vacancy level (2%) and density ratio (approx. 430 m²/ 1,000 inhabitants) indicate high potential of this region, which was discovered by developers. Upper Silesia also has the highest pipeline (124,500 m²) and two large scale shopping centres are planned for delivery in 2013 – Europa Centralna and Galeria Katowicka.
  • Łódź – total retail stock amounts to 505,600 m² and is dominated by traditional SC (493,000 m²). In 2012 first specialized shopping centre appeared on the market – Ptak Outlet (first phase of 12,600 m²). Vacancy rate amounts to 1.9%.
  • Szczecin is the smallest regional market in Poland. Traditional SCs offer 237,600 m². In 2012 the first outlet centre in Szczecin was completed – Outlet Park Szczecin (16,500 m²) developed by Echo Investment. Retail market in Szczecin has the lowest vacancy ratio among major Polish agglomerations – it amounts to 1.1%.

PROGNOSIS

  • Currently, there is almost 800,000 m2 of retail space under construction. Due to developers’ high level of activity, the increase in supply in 2013 will be higher than in the previous year, and is estimated to reach approximately 600,000 m2. Developers are once again interested in major Polish cities, where they are looking for gaps in terms of location, complementary offer or diversity of the retail format that they could fill in.
  • The biggest openings planned for 2013 include Europa Centralna in Gliwice (67,000 m2), Galeria Bronowice in Krakow (approx. 60,000 m2), Poznań City Center in Poznań (58,000 m2), Galeria Katowicka in Katowice (50,500 m2) and the extension of SC Wzgórze in Gdynia.
  • Some tenants are opening stores in new locations, for example an intensive expansion is planned by Grupa LPP, which has recently introduced a new brand Sinsay. Tenants are also diversifying the ways they reach consumers by for example online sales. They are also looking for opportunities to strengthen their offer by introducing new concepts (e.g. new concept of Douglas – Douglas Beauty Studio).
  • Prime rents in the best retail locations should be relatively stable in 2013. A decline in rental rates is expected in less popular or older generation shopping centres and those less favourably situated. Currently, the retail market in Poland can be described as a tenants’ market; therefore, tenants are reviewing their rents agreed a few years ago.
  • Pressure on rents and the extended period of commercialization of new projects can translate into an increase in vacancy rates in selected markets. 

Unlike in the previous year, many shopping centres planned for 2013 are large-scale projects with GLA exceeding 50,000 m2. On the other hand, growing interest is being recorded in small shopping centres with a local range offering convenient shopping.” – comments Klaudia Woźniak, Director, Retail Agency, Colliers International.