First retail schemes were constructed at the beginning of the 1990s, with the development of retail trade and the emergence of new tenants searching for high class space in attractive locations. In 1995, a Portuguese retail chain Jeronimo Martins Booker Holding entered the Polish market and acquired Eurocash wholesalers and later in 1998 “Biedronka” retail chain with its 210 stores. Another important event that occurred five years later was the delivery of Galeria Mokotów (currently over 68,000 sqm) to the market. This was the first shopping centre at a big scale that still enjoys its reputation. Arkadia, Manufaktura (each ca. 110,000 sqm) and Złote Tarasy (64,000 sqm) were developed in subsequent years.

“Key factors driving the market 20 years ago consisted in the lack of large format schemes and retail chains expansion. New categories of tenants and new retail formats were gradually formed. Today, there is not a single city in Poland without modern retail schemes, while Polish shopping centres are in the lead in Europe in terms of functionality, interior and architectural design,” says Marta Machus-Burek, Partner at Colliers International and Director of Retail Agency.

The global financial crisis from a decade ago cooled down investors’ appetite for a while
to carry out subsequent retail investments. Nonetheless, solid foundations of the Polish economy, combined with robust internal demand quickly gave Poland back the position of an attractive country for retail chains and developers as confirmed by spectacular projects, such as Silesia City Center (48,000 sqm) or recently completed Posnania (roughly 100,000 sqm), Galeria Północna in Warsaw (64,000 sqm), Wroclavia (64,000 sqm) and Serenada in Kraków (42,000 sqm).

Attract the client

With time, the function of shopping centres has changed to more social and entertainment role. Today, shopping centres are not only places for shopping, but they also serve as social life destinations. As a result, clients expect diverse entertainment and culinary offer apart from attractive shops. Additionally, owners of retail schemes are striving to stand out with interior arrangements and architecture, e.g. glazed facades and original shop windows, in an effort to attract clients.

“Today, even the best location is not enough for clients to visit a shopping centre. There are dozens of opportunities of spending free time and shopping, among others, owing to the Internet, which has changed clients’ habits and behaviours. However, e-commerce will not satisfy the need of contact with other people. Therefore, managers and tenants have to stay abreast of changing consumers’ lifestyle. Clients come to shopping centres seeking for new experiences. Space should inspire, stand out and be entertaining. Managers and tenants should closely cooperate and actively manage the space to maintain competitiveness and interest of clients,” underlines Marta Machus-Burek.

Retail schemes have a big city-creation potential. The development of a shopping centre is frequently associated with modernization or creation of transportation infrastructure around the building or creating attractive urban spaces, allowing to spend time in a nice atmosphere. Moreover, thanks to developers, old and forgotten buildings can regain its former glow (e.g. Hala Koszyki) and undeveloped urban tissue gets new life.

Analysis is the key to understand clients

With the development of new technologies, space in shopping centres becomes more digital. Property managers and tenants eagerly grasp innovations to analyse visitors’ activities to better understand changing clients’ needs and more accurately personalize offering. With clients’ comfort in mind, many schemes ensure access to the Internet with the use of wireless Wi-Fi network. Clients can also use dedicated mobile applications that inform about promotions and special events taking place in a shopping centre or help them find a parking spot. Interactive screens are also at clients’ disposal, allowing for quick finding of stores of specific brands.

“Today, the problem is not about the lack of information on clients, but surplus of data. Therefore, data selection and analysis is increasingly playing a more important role every year. We can expect in the future that property managers and tenants will more eagerly reach for tools like big data, so they identify emerging trends and adjust the business to new circumstances. This will enable them to better understand clients’ shopping needs and arrange space and tenant-mix accordingly,” explains Marta Machus-Burek.

Time will come for premium brands

Two decades ago, the Polish economy was only picking up its pace, trying to stop an increasing unemployment reaching even 30% in some locations. With improving market situation and increasing wealth in the society, luxury goods spending started to rise. Poles allocated most of their money to, among others: prestigious cars, properties, jewellery, watches, as well as luxury SPA treatments[1]. Although luxury goods market is growing, it is not translating into an increase in trade volume of upper class products in shopping centres.

“Shopping centres in Poland are not yet popular spots for buying premium products. This stems from lower tourist potential, compared with e.g. Prague, with a number of luxury brands not available in Poland. This is because Prague is visited by more affluent tourists from Asia and the U.S. Besides, it’s difficult for prestigious brands to get franchise partners for expansion. Also, Poland lacks exclusive high streets, which failed to emerge in the country so far. Nonetheless, we are observing a growing interest in Poland amid foreign luxury brands, which in the future may result in opening stores with premium offering,” says Marta Machus-Burek.

What’s ahead for the market?

There are roughly 500,000 sqm of shopping centre space under construction. Poland’s biggest retail market is Warsaw agglomeration with 47 schemes totalling over 1.5 m sqm GLA and Katowice conurbation (44 schemes, 1.1 m sqm GLA). New schemes are primarily developed in biggest agglomerations (71% of space) and in small cities of below 100,000 of inhabitants (21% of space). Biggest shopping centres under construction are: Galeria Młociny (73,000 sqm), Forum Gdańsk (62,000 sqm) and Galeria Libero (45,000 sqm). 

A noticeable market trend is expansion and modernization of existing schemes, which account for ca. 12% of supply under construction. This trend is to maintain also next year.

“Owners of particularly older retail schemes have to invest in improving the quality of space and new functionalities. Owing to that, they have a chance to maintain competitiveness and better respond to changing clients’ needs,” - explains Marta Machus-Burek.

More on the latest trends on the retail properties market on our blog

[1] KPMG report “The Luxury Goods Market in Poland” of 2016