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Retail park rally boosts case for turnover rents

Footfall in Polish shopping malls stands at around 62% to 73% of last year’s figures according to Trei Real Estate Poland.

The figures, which originate from data provided by the Polish Council of Shopping Centers, illustrate how the pandemic has changed the habits of Polish people who are are now planning their shopping in a more thoughtful, cautious and safe way states Trei Real Estate Poland. Small-format shops located catering for a local market now attract more visitors.

Trei Real Estate Poland’s Vendo Park Jawor.

The firm said that by the end of May, after negotiations between owners and tenants had been completed, almost all shops in Poland’s retail parks were in operation and such was the resurgence in shopping that some recorded turnover at 160% of pre-lockdown levels.

Trei Real Estate Poland, which is part of Düsseldorf-based Trei Real Estate, in turn a wholly-owned subsidiary of the Tengelmann group, is one of three companies that was chosen by the community of retail park owners operating in Poland to represent them in talks with tenants. Negotiations were held with 38 chains and companies operating in 900 stores in more than 200 retail destinations across the country.

“The talks started at the beginning of April. The openness and willingness of both sides to cooperate meant the entire process ran very smoothly and, thanks to that, all retail parks have now been opened,” said Jacek Wesołowski, managing director of Trei Real Estate Poland.

Post-lockdown sales boosted turnover

After reopening, many tenants announced discount sales, often designed to shift stock that had remained unsold owing to the lockdown. This has, in turn, resulted in a rapid increase in turnover.

Wesołowski said that the recent round of rent settlements concluded with tenants of Trei’s Vendo Parks portfolio agreeing rents based on turnover. However, he says that during these negotiations there was no expectation that retail parks would recover quite so quickly. However, tenants’ turnovers now exceed pre-pandemic levels by between 20% and 60%. This is partly attributable to the re-opening discount sales, but Wesołowski believes it is also due to the fatigue that society suffered in the lockdown. “For many of us, going shopping in a retail park was the first tangible stage of returning to our daily routines”, he commented.

Wesołowski adds that while e-commerce is now more important and is a significant alternative, it also complements the turnover of bricks and mortar stores with retail parks providing a bridgehead for e-commerce and click-and-collect shopping. Retail parks’ lack of common areas and the fact that entrance to shops is gained directly from car parks, makes collection or return of goods a faster and safer activity.

Nevertheless, click-and-collect is also an increasingly popular form of shopping in enclosed shopping centres, which he said has prompted calls for e-commerce revenue to be included in assessments of turnover for retailers.

More transparency needed between landlord and tenant

Wesołowski said greater openness is needed between landlords and tenants. “Shops don’t share their Internet deal revenue with landlords. Such a system is no longer valid, and new settlement rules need to be developed. E-commerce must be included in the turnover,” he stated.

Despite the burst of retail activity, Wesołowski said the return to normal will be slow and is likely to take the whole of 2021. This will be a period of stabilisation in both trade and the economy but luxury goods shops are likely to be the slowest to return to pre-pandemic turnover levels, he added.